ARTICLE
13 January 2025

Competition Commission Of India

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On January 3, 2022, CCI ordered an investigation against IREL (India) Limited ("IREL") for imposing unfair and discriminatory conditions and pricing in supply of Beach Sand Sillimanite...
India Antitrust/Competition Law

Enforcement

CCI closes case against IREL (India) Limited for alleged abuse of dominant position

On January 3, 2022, CCI ordered an investigation against IREL (India) Limited ("IREL") for imposing unfair and discriminatory conditions and pricing in supply of Beach Sand Sillimanite ("Sillimanite") to MSMEs, in contravention of Section 4 of the Competition Act. For a summary of the said CCI order, refer to JSA Competition Law Newsletter January 2022.

IREL is a Government of India undertaking, engaged in the mining, production and sale of minerals like Ilmenite, Rutile, Zircon, Girnet and Sillimanite.

The complainant inter alia alleged that IREL: (a) increased the price of Sillimanite exponentially from INR 9,000 (Indian Rupees nine thousand) per metric tonne in 2016-17 to INR 14,000 (Indian Rupees fourteen thousand) per metric tonne in 2020-21, without providing any objective justification; (b) engaged in discriminatory pricing by selling Sillimanite to MSMEs at a higher rate compared to the rate being offered to multi-national companies; and (c) arbitrarily fixed the supply quantity of Sillimanite, thereby forcing its customers to accept the quantity as determined by IREL. Basis the complaint, CCI directed the Director General ("DG") to investigate the matter.

After a detailed investigation, the DG submitted its investigation report ("DG Report") to CCI and concluded that IREL is dominant in the 'market for mining and supply of Beach Sand Sillimanite in India' ("Relevant Market") and that it abused its dominant position in the Relevant Market by engaging in: (a) charging excessive prices from certain customers; and (b) discriminatory pricing and supply of Sillimanite against domestic customers vis-à-vis foreign customers i.e.,: (i) offering higher quantities to foreign customers; and (ii) charging less prices from foreign customers.

Proceedings before CCI

CCI agreed with the findings of the DG in relation to the dominance of IREL, however, it concluded that IREL did not abuse its dominant position in the Relevant Market for the following reasons:

  1. Excessive pricing: None of the customers of IREL ever complained of excessive pricing and the DG showed no evidence of a complaint from any customer in this regard. Pricing determination is a complex mechanism which considers various factors such as demand and its elasticity, possible rival reaction, availability of imported substitutes etc. On the contrary, the price charged by IREL's competitor was much higher than what IREL charged; and
  2. Discriminatory pricing and supply conditions: Quantity of Sillimanite supplied and the prices charged by IREL to different categories of customers differ for reasons such as long-standing business relations, assured off-take quantity, past off-take, availability of quantities, commercial wisdom, etc. Every commercial enterprise enjoys the freedom to carry out trade and take appropriate business decisions. As normal business prudence, a party buying in bulk would get better terms (including purchase price) than a small buyer. Therefore, such conduct is not discriminatory.

Accordingly, CCI dismissed the case.

(Source: CCI order dated October 8, 2024)

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