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Public Version
COMPETITION COMMISSION OF INDIA
Case No. 26 of 2022
In Re:
Beach Mineral Producers Association
Ittamozhi Road, Mahadevankulam (Post),
Tirunelveli District, Tamil Nadu – 627 657.
Informant
And
IREL (India) Ltd.
Plot No. 1207, ECIL Building,
Veer Savarkar Marg, Opp. Siddhivinayak Temple,
Prabhadevi, Mumbai – 400 028, Maharashtra.
Opposite Party
CORAM
Ms. Ravneet Kaur
Chairperson
Mr. Anil Agrawal
Member
Ms. Sweta Kakkad
Member
Mr. Deepak Anurag
Member
PRESENT
For the Informant : None
For the Opposite Party : Mr. Tarun Gulati, Senior Advocate, with Mr. Abhay Joshi, Ms. Aayushi Sharma, Ms. Bhaavi Agrawal, Mr. Pavan Kalyan and Ms. Shruti, Advocates, and Mr. G.Balasubramanian, General Manager of IREL (India) Ltd.
ORDER
Facts
Information in the present matter was filed by the Beach Mineral Producers Association (the ‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against IREL (India) Ltd. (the ‘OP’), alleging contravention of the provisions of Section 4 of the Act.
The Informant, a society registered under the Tamil Nadu Societies Registration Act, 1975, comprising members involved in beach minerals industries, filed the present Information alleging that the OP, a Mini Ratna, Category I, Central Public Sector Undertaking (‘PSU’), engaged in mining and production of certain minerals, rare earths and chemicals, is abusing its dominant position in the relevant market of ‘mining and supply of Beach Sand Ilmenite in India’.
As per the Informant, post 2018, the OP is the sole producer/ miner of a Beach Sand Mineral (‘BSM’) viz. ‘Beach Sand Ilmenite’ in India. The members of the Informant, who are dependent on the OP for Ilmenite and other BSM, are facing a major crisis in the form of shortage of supply of Ilmenite. The OP often does not respond to Expression of Interest (‘EoI’) issued by domestic consumers of Ilmenite, and rather responds with a Standard Quantity Sales Contract (‘SQSC’) which contains a pre-determined quantity (most of the time lower than demanded). In the absence of any choice, the domestic consumers are forced to accept the extraneous conditions mentioned in the SQSC. Further, the OP supplies adequate quantity of Ilmenite to foreign companies/ multi-nationals, which also contributes to inadequate supply of Ilmenite for domestic consumers.
As per the Informant, such practices of the OP amount to imposition of unfair or discriminatory conditions in the sale of Ilmenite, in violation of the provisions of Section 4(2)(a)(i) of the Act. Further, the act/ policy of OP in the form of restricted/ limited supply to domestic consumers also amounts to contravention of the provisions of Section 4(2)(b)(i) of the Act. Apart from the above, the discriminatory and arbitrary policy/ act of the OP in the supply of Ilmenite also amounts to denial of market access in violation of the provisions of Section 4(2)(c) of the Act. Also, as the OP is giving dissimilar treatment to similarly placed consumers i.e., domestic enterprises and foreign companies, which causes distortion of competition in the downstream industries such as paints, tiles, glazed papers, plastics and cosmetic products, such conduct of the OP is in violation of the provisions of Section 4(2)(a)(ii) of the Act. Lastly, as the OP is the sole producer/ miner of Beach Sand Ilmenite, it also makes arbitrary and exorbitant increase in the price of Beach Sand Ilmenite, from time to time. Excessive pricing is an element of ‘unfair price’ in terms of Section 4 of the Act and as such, imposition of such exploitative, excessive prices is also in violation of the provisions of Section 4(2)(a)(ii) of the Act.
Upon consideration of the above Information filed by the Informant, the Commission sought comments of the OP on the same. Thereafter, upon comments of the OP, the Commission also allowed the Informant to file its rejoinder.
In its comments, the OP contested the jurisdiction of the Commission by submitting that as it caters to the supply of key strategic minerals, chemicals etc., meant for the atomic energy program in the country, all its operations are incidental to sovereign functions of the Government of India (‘GoI’) and hence, it does not fall within the meaning of ‘enterprise’ defined under Section 2(h) of the Act. Further, it denied its dominant position w.r.t. Beach Sand Ilmenite contesting existence of other players in the market and mentioning its worldwide share as 2-3 percent only, and it also mentioned import of Ilmenite as a competitive constraint. The OP also challenged the mala fides of the Informant as well as tried to justify the prices being charged. The OP also stated that only surplus quantities are exported by it, that too under an Memorandum of Understanding (‘MoU’) of the GoI, and exports are made only after earmarking the estimated requirements of the domestic customers. As such, there is no case made out against the OP.
In the rejoinder, the Informant reiterated the averments made in its Information as well as stated that since marketing or sale of Ilmenite by the OP is purely a commercial activity and has no link to ‘atomic energy’, its such function cannot be termed as a sovereign activity to exempt the OP from the jurisdiction of the Commission. Further, the Informant stated that import of Ilmenite cannot be placed in the same market as sale of domestically produced Ilmenite because of price difference. The Informant also reiterated the dominant position of the OP in sale of Ilmenite in India even if the OP is stated to have a few small competitors in this market in India.
Upon consideration of the Information filed by the Informant, the comments of the OP thereon, and the rejoinder filed to such comments by the Informant, the Commission formed a prima facie view that – the OP is an ‘enterprise’ within the meaning of the Act performing commercial activities, the relevant market is ‘mining and supply of Beach Sand Ilmenite in India’, the OP is dominant in this market, and the conduct of the OP as described by the Informant (preferential treatment, excessive pricing, unfair conditions in SQSC) is in violation of certain provisions of Section 4 of the Act. Therefore, vide order dated 18.10.2022 passed under Section 26(1) of the Act, the Commission directed the Director General (‘DG’) to cause an investigation to be made in the matter and submit an investigation report.
Investigation by the DG
The Commission considered the investigation report submitted by the DG in its ordinary meeting held on 07.07.2023, and forwarded an electronic copy of the same to the parties, giving them an opportunity to file their objections/ suggestions, if any, to the same. Further, the OP was also directed to file its duly audited financial statements including Balance Sheets and Profit and Loss Accounts for the Financial Years 2020-21, 2021-22 and 2022-23 along with details of the revenue/ turnover/ income generated from the sale of Ilmenite during these financial years, before the Commission. The parties were also asked to exchange their objections/ suggestions with each other and given liberty to file rejoinder to each other’s objections/ suggestions, if any.
Further, on 09.10.2024, the Commission held an oral hearing in the matter wherein, on behalf of the Informant, no-one appeared, and the Commission heard in detail, the submissions made by the learned senior counsel for the OP, including on the quantum of penalty, if any, imposed in the matter. The Commission also allowed the OP to file a brief synopsis of its oral arguments, upon its prayer.
