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CCI bangs explosives makers with Rs 60 cr fine vs Coal India, Amarchand

Explosion
Explosion

Amarchand Mangaldas’ Delhi office won for Coal India (CIL) yesterday in its Competition Commission of India (CCI) complaint against 10 explosives manufacturers fined and held to have engaged in anti-competitive practices.

The CCI collected a total fine of Rs 60 crores from the manufacturers that were penalized with 3 per cent of their annual turnover for the last three financial years. They were also directed to ‘cease and desist’ from manipulation of the supply contract bidding process in any manner.

Amarchand senior partner Pallavi Shroff with principal associate Shweta Shroff Chopra, senior associate Harman Singh Sandhu and associate Yaman Verma acted for CIL in its complaint under Sections 3 and 4 of the Competition Act 2002 (The Act), in Coal India Limited vs GOCL Hyderabad & Ors.

CIL’s complaint about anti-competitive agreement and abuse of dominant market position, alleged that the explosives manufacturers had formed a cartel controlling 75 per cent of the market since 2005.

They were quoting pre-determined prices, threatening to stop supplies and boycotting electronic reverse auctions organized by CIL to finalize its suppliers for explosives.

CIL which accounts for 85 per cent of the country’s coal production was unable to get a fair deal for products like bulk explosives, cartridge explosives, fuses and detonators, because of the cartelisation. For every day of not producing coal, it was losing Rs 114 crore, according to The Hindu Businessline.

The CCI in a unanimous decision noted that there was indeed a concerted action by the manufacturers to boycott the auction and manipulate CIL’s bidding process, in violation of Section 3(3)(b) of the Act.

Further, the collective boycott had resulted in foreclosure of free and fair competition. Given that the cartel controlled 75 per cent of the Indian explosives market, there was an appreciable adverse affect on competition.

The explosives manufacturers included Gulf Oil Corporation, Ideal Industrial Explosives, Solar Industries India, Blastec India, Indian Explosives, Emul Tek, Regenesis Industries, Techno Blasts India, Black Diamond Explosives, and Keltech Energies.

Only one manufacturer, Ideal Explosives, pleaded its case through company representatives, while the others adopted the Directorate General’s findings without filing any separate objections and observations.

CIL’s complaint of 20 February 2012 had come within months of a complaint against it by the Explosives Manufacturers Association of India (EMAI) for procuring 20 – 22 per cent of its requirement from a single manufacturer, without inviting bids, according to The Hindu Businessline.

Photo by Andrew Kuznetsov

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