CCI dismisses allegations against Hindalco and Vedanta

CCI DISMISSES ALLEGATIONS AGAINST HINDALCO

The Competition Commission of India (CCI) dismissed a complaint against Hindalco Industries Ltd and Vedanta Limited alleging unfair business practices with respect to copper products.

The fair trade regulator closed the matter as the informant was not able to substantiate the allegations made against the companies.

An information was filed with the CCI under Section 19(1)(a) of the Competition Act, 2002 (the 'Act') against Hindalco Industries Limited and Vedanta Limited (together the OPs) alleging inter alia cartelisation in determining prices of certain copper products in India, sharing the market of certain copper products by way of allocation of customers and engaging in bid rigging/ collusive bidding in violation of the provisions of Section 3(1) of the Act read with Sections 3(3)(a), 3(3)(c) and 3(3)(d) thereof.

According to the informant, the OPs control around 85-90% of the domestic production and around 75-80% of the domestic supply, giving them a virtual stranglehold on supplies in the Indian market. Further, both the companies engaged in cartelisation in production and supply of refined copper products and cartelised with respect to additional charges that could be freely determined by the manufacturers and that till about 2018, the officials of both the companies would frequently discuss and set the prices.

He also alleged that in their cartel, the OPs carved out certain customers amongst themselves. With respect to such customers, each OP would refrain from going after the other party's customers which would not have been possible had they been competing with each other for such customer's share. Further, the freight charges imposed by the OPs with respect to each geographical region (other than eastern India) are also identical.

It was also alleged that the OPs have cartelised in respect of supplies against tenders issued by the defence industry thereby causing immense harm to the public welfare as well as national interest. The Informant sought that the Commission direct the Director General (DG) for investigation against the OPs and to issue cease and desist order from engaging in their anti-competitive conduct, penalize the OPs and pass any other direction that the Commission may deem fit.

According to the CCI, "To assess the allegations of price cartelization in terms of additional charges for copper products between the OPs, as averred in the Information, the Commission notes that mere price parallelism in itself is not sufficient to order probe in the absence of any other material on record wherefrom collusion or concert between the OPs can be inferred."

Touching upon the allegations of bid rigging by the OPs in respect of the various tenders floated by Indian Ordnance Factories, the Commission held that, in the absence of any material showing even prima facie concert or specific averment as to collusion, it is neither feasible nor desirable to embark upon any roving probe in respect of the tenders which are stated to have been concluded as early as July 2010 to August 2017. "It cannot be gainsaid that the regulatory resources have to be optimally deployed so as to prioritise the enforcement task. Such open-ended bald allegations in an omnibus manner does not further the public cause. Resultantly, the Commission holds that there is nothing on record to indicate contravention of the provisions of Section 3(3)(d) of the Act read with Section 3(1) thereof on this ground as well", it added.

The CCI concluded that the Informant has not been able to substantiate the allegations made in the Information and as such the Commission finds no case of contravention of the provisions of Section 3 of the Act against the OPs in the instant case. The matter is, thus, ordered to be closed forthwith in terms of the provisions of Section 26(2) of the Act.