Interim relief for explosive manufacturers

Competition appellate tribunal (COMPACT) has put an interim stay on the order of monopoly watchdog Competition Commission of India (CCI) against explosive manufactures.In April, the CCI had imposed a penalty of Rs 60 crore on 10 explosive manufacturers following a complaint by Coal India that the firms had formed a cartel. Though COMPACT has stayed the penalty imposed by CCI, the tribunal has asked the 10 firms to deposit 5 per cent of the penalty amount in an interest-bearing bank account.The complainant, Coal India, had earlier alleged that 10 manufacturers of explosives, a critical product used in coal mining and production, had colluded to jointly boycott the reverse bidding process for the procurement of explosives. The CCI decided in favour of Coal India and imposed a penalty of 3 per cent of the average turnover on the explosive manufacturers.Arguing for the explosive manufacturers, senior counsels Ramji S. and A. Haksar maintained that the order of the CCI was against the principles of natural justice, since CCI had not served the explosives manufacturers with the objections to the report of the DG filed by Coal India.Percival Billimoria, senior partner of law firm AZB & Partners, argued that the moment the objections of Coal India contained fresh documents it became an inquiry. And once it became an inquiry, making service of notice on the explosive manufacturers became mandatory.Cartel cases are under the lens for the heavy penalties being imposed by CCI. This particular case in COMPACT may set precedence for the cement cartel case, which is expected to come up for appeal before the COMPAT soon. The CCI had levied an aggregate penalty of over Rs 6,000 crore on the cement manufacturers which has made Indian industry sit up and take notice.The Competition Commission in April fined 10 explosive makers for cartelization. These manufacturers had formed a cartel while quoting bids floated by Coal India. Law firm Amarchand Mangaldas, which represented Coal India in the matter, said the CCI had found Gulf Oil Corporation Ltd, Ideal Industrial Explosives Ltd, Solar Industries India Ltd, Blastec India Pvt. Ltd and Indian Explosives Ltd, among others, guilty of violating the Competition Act, 2002. Coal India had filed its complaint under provisions dealing with anti-competition agreement and abuse of dominant market position of the Competition Act.It had alleged that, apart from the companies, the Explosives Manufacturers Welfare Association and Explosives Manufacturers Association of India formed a cartel and quoted similar bid prices. Coal India said as result of the cartelization it was unable to get a fair deal for products like bulk explosives, cartridge explosives, fuses and detonators. “For every day that it (CIL) does not produce coal, it suffers loss of approximately Rs 113.95 crore,” the CCI had earlier observed in its order.

Interim relief for explosive manufacturers

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