CIL board to discuss in detail CCI's Rs 1,773 cr fine

Tags: CCI, CIL, Companies
Coal India board is likely to discuss soon in detail the fallout of CCI

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slapping Rs 1,773 crore penalty on it and the future course of action in this regard.

Fair trade regulator CCI's penalty comes at a time when the miner is facing flak for shortfall in production that is adversely impacting power generation.

A source privy to the development said "CIL (Coal India Ltd) may soon take up the issue to its board and discuss the fallout of the order of the Competition Commission. The board is expected to discuss the development in detail."

The Competition Commission of India (CCI) earlier this week had slapped a fine of Rs 1,773 crore on the company, the first major penalty on a state-owned company by the fair trade watchdog, for abusing its dominant position in fuel supplies.

Reacting to the development, Coal India had said that it would initiate "appropriate legal action".

"The Company is seized of the matter and appropriate legal action shall be initiated after the receipt of the copy of the order by post," Coal India (CIL) said in a filing to the BSE.

The CCI, in its order on December 9, said that CIL is operating independently of market forces and enjoys an undisputed dominance in the country for production and supply of non-coking coal.

Touching upon a host of issues related to coal supplies, including sampling and testing procedures, the regulator also ordered the world's largest coal miner to modify the fuel supply agreements (FSAs) after consulting stakeholders.

The fair trade regulator has also directed the company to cease and desist from anti-competitive practices.

The order came on complaints filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corp against Coal India and three subsidiaries -- Mahanadi Coalfields, Western Coalfields and South Eastern Coalfields.

The quantum of penalty -- Rs 1,773.05 crore -- is equal to three per cent of the PSU's average turnover for the last three years.

The ruling assumes significance since in recent times, Coal India has drawn flak for fuel shortages that have been hurting the country's power generation.

According to the CCI order, Coal India abused its dominance and did not try to evolve/draft/finalise terms and conditions of FSAs through a mutual bilateral process.

The Commission said that Coal India was "imposing unfair/discriminatory conditions in FSAs with power producers" that violate fair trade norms.

Besides, the CCI has directed Coal India to ensure parity between old and new power producers as well as between private and public sector power producers, "as far as practicable".

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