Airen Metals Private Limited, Airen Copper Pvt. Ltd And Hindalco Industries Limited, M/s Vedanta Limited

Case No. 31 of 2024 Page 1 of 10 COMPETITION COMMISSION OF INDIA Case No. 31 of 2024 In Re: Airen Metals Private Limited (Through M/s Bakbone Recovery and Consultancy Pvt. Ltd.) 246 Engineers Colony, Sirsi Road, Panchyawala, Jaipur-302034 Airen Copper Pvt. Ltd. (Through its Director Mr. Bhuwnesh Sharma) F-728, Road No. 9F2, VKI Area, Jaipur- 302013. Informant No. 1 Informant No. 2 And Hindalco Industries Limited (Unit: Birla Copper) 21st Floor, One Unity Centre, Senapati Bapat Marg, Prabha Devi, Delisle Road, Mumbai – 400013 Opposite Party No. 1 M/s Vedanta Limited, 1st Floor, ‘C’ Wing, Unit 103, Corporate Avenue, Atul Projects, Chakala, Andheri(E) Mumbai, Maharashtra, India- 400093 Opposite Party No. 2 CORAM Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Mr. Deepak Anurag Member Case No. 31 of 2024 Page 2 of 10 Order under Section 26(2) of the Competition Act, 2002 1. The present Information has been filed by M/s Airen Metals Private Limited (‘AMPL’/‘Informant No.1’) and M/s Airen Copper Pvt. Ltd (‘ACPL’/‘Informant No.2’), (collectively referred to as ‘Informants’) under Section 19(1)(a) of the Competition Act, 2002 (‘Act’) alleging contravention of the provisions of Sections 3 and 4 of the Act, by M/s Hindalco Industries Limited (‘HIL’/‘OP-1’) and M/s Vedanta Limited (‘VL’/‘OP-2’) (collectively referred to as ‘Opposite Parties’/‘OPs’). 2. As per the Information, OP-1 and OP-2 are in the business of providing Refined Copper (viz. Copper Wire Rod, Copper Cathode etc.) to companies who process and convert it to manufacture finished products of copper. OPs are stated to control almost 75% of the business of providing refined copper while the remaining 25% business is being catered by import/unorganised sector. It is stated that OPs, being the sole suppliers of copper in the Indian market, have been enjoying duopoly status in India since the last 30 years. The total annual consumption of refined copper within the country is around 6.6 Lakh Tonne, out of which share of OP-1 is 55 to 62% and share of OP-2 is 18 to 22%. 3. It is stated that M/s Airen Metals Private Limited/Informant No.1 along with its then Group Company i.e. M/s. Airen Copper Pvt. Ltd./Informant No.2 was purchasing its raw material i.e. Copper Wire Rod/Copper Cathode from the OPs till FY 2020-21. 4. As per the Informants, companies desirous of buying copper are required to place their respective bookings with the OPs on unknown price viz. Cash Settlement Price (‘CSP’) of the day declared by the London Metal Exchange (‘LME’). It has been stated that OPs, on receipt of the order for purchase of copper will thereafter immediately resort to hedging back-to-back on LME Platform, and it is for that reason alone that the OPs were accepting the copper booking from its domestic customer on unknown price viz. CSP of the day declared by LME; month average of CSP, any period average of CSP within the same calendar month, Real Time Spot Price. 5. It has been stated that the back-to-back hedging by OPs is also evident from the identical marketing policy of OP-1 and OP-2, which, inter-alia, provide that if a Case No. 31 of 2024 Page 3 of 10 booking made by a purchaser is not lifted, in that event OP-1 and OP-2 will have option to liquidate the booking and recover losses/other charges from that purchaser. As per the Informant, the amount of loss claimed by the OPs, cannot be calculated unless back-to-back hedging has been done by the OPs. The relevant clauses from the marketing policies of both OP-1 and OP-2 are reproduced as under: OP-1 (M/s Hindalco Industries Limited) Carry over cost: 1. PBND (Priced but not dispatched) a. LME Booking done between 1st to 23rd is to be lifted within the same month and in case it is carried over to the next month then carry over charges of $15 will be charged for each month of carry over. The bookings are to be lifted within M+2, otherwise HIL will have option to liquidate the same and recover losses/other charges from the customer. b. LME Booking done after 24th of the month can be lifted by end of next month and in case it is carried over to the M+2 month then carry over charges of $15 will be charged for each month of carry over. The bookings are to be lifted within M+3, otherwise HIL will have option to liquidate the same and recover losses/other charges from the customer. OP-2 (M/s Vedanta Limited) vii) PNDL Carry over charges: a) Material Priced between 1st to 23rd of the month (M) Sr. no Particulars Applicable Charges 1 Material lifted within the same month Nil 2 Material lifted in the next month (M+1) US$ 15/- PMT 3 Material lifted in (M+2) US$ 30/- PMT 4 Material not lifted till (M+2) Seller has the option to de-price the material on or after the last LME day of M+2 and recover Case No. 31 of 2024 Page 4 of 10 the LME difference (D) from the buyer. US$ 45/- PMT+D, in case the seller decides not to exercise the de-pricing option on last LME day of M+2. b) Material Priced between 24th to 31st of the month (M) Sr No. Particulars Applicable Charges 1 Material lifted by last working day of subsequent month (M*+ 1) Nil 2 Material lifted in (M*+2) US$ 15/- PMT 3 Material not lifted till (M*+3) US$ 30/- PMT 4 Material not lifted till (M*+3) Seller has the option to de- price the material on or after the last LME day of M+3 and recover the LME difference (D) from the buyer. US$ 45/- PMT + D, in case the seller decides not to exercise the de- pricing option on last LME day of M+3. 6. It has also been stated that companies were required to give booking margin/financial arrangement in the form of security money to OPs for placing order for the purchase of copper as per OPs marketing policy. Normally, such security amount varied from 5 to 10% of the copper price and the booking margin could be given either in cash or in the form of Bank Guarantee (‘BG’) to the OPs. Further, in case the prevailing rate of copper in LME platform comes down in comparison to booking rate, then customers were required to make an additional Mark to Market (‘MTM’) payment to OPs, over and above the existing security money. Case No. 31 of 2024 Page 5 of 10 7. As stated by the Informants, they received purchase order for different items of copper from Bharat Heavy Electricals Limited (‘BHEL’) and Central Organization for Railway Electrification (‘CORE’) as detailed below: S. No. Date Name of the Company Quantity (MT) 1. 21.05.2019 BHEL 300 2. 05.09.2019 BHEL 492 3. 16.01.2020 CORE 1269 Total 2061 8. In order to meet the requirement of supplying copper to BHEL and CORE, the Informants placed orders for the same to the OPs in terms of their respective marketing policies. The Informants lifted the copper booked with OP-1, however, out of the total amount of copper booked between 22.01.2020 and 10.06.2020, 933.131 MT remained to be lifted from OP-1 and at that time, security deposit of Rs. 1,82,92,023/- was available with OP-1. Similarly, the Informants booked Copper from OP-2 between 02.03.2020 and 01.06.2020 and after lifting the booked Copper with OP-2, 92.283 MT copper was pending for lifting by the Informants. 9. It has been stated that due to Covid-19, there were closure of industries and a lack of demand in the economy, which resulted in non-payment of booked copper to the OPs. Due to non-payment of invoices (which were duly covered through BG) in the prescribed time period of 90 days, the OPs invoked the entire BG amounting to Rs. 50.35 crores, provided in favour of OP-1 and OP-2 almost at the same time i.e. 02.07.2020 and 03.07.2020 in spite of the fact that all the BGs were having sufficient time period in their expiry. 10. It has also been stated that both the OPs adjusted the amount of BGs invoked by them against the various bills, which as per the terms and conditions of the payment could have been made by the Informant within 90 days after the date of bill. Therefore, both the OPs in a concerted action, during the peak time of Covid-19 Pandemic, due to their dominant position, decided to invoke all the BGs lying with them towards adjustment of their bills by curtailing the normal period of 90 days available to the Informants in the normal course of business.