Beach Mineral Producers Association Vs IREL (India) Ltd (Competition Commission of India)
The Commission notes that, until 1988, beach sand mining was restricted to the public sector owing to coexistence of monazite, a heavy mineral used for the production of thorium. Realising the untapped potential in the beach sand minerals sector, the Department of Atomic Energy (DAE) opened up the sector to the private sector with some conditions. In this regard, the Commission notes that the prospecting and mining rights of offshore minerals under the Offshore Areas Minerals (Development and Regulation) Act, 2002 was reserved exclusively for the government and government-owned companies to curb illegal mining of atomic minerals by private parties.
Thus, the policy change by the Central Government has made OP the sole producer/miner of ilmenite, and it is a monopoly, which is also evident from the statements in the annual reports of the OP. Based on the above, the Commission is of prima facie opinion that the OP is dominant in the relevant market of ‘mining and supply of beach sand ilmenite in India’ and has the ability to operate independently of market forces.
As OP is prima facie found to be a dominant entity involved in the mining of beach sand mineral ilmenite, the allegations made by the Informant need to be examined in this perspective. In this regard, the Commission notes that the Informant is aggrieved by the following three conducts: (a) Inadequate supply or refusal to supply or restricted supply of beach sand ilmenite, (b) Discriminatory pricing among domestic and foreign consumers, and (c) Unfair/excessive prices of ilmenite.
The Commission notes that the Informant, in its rejoinder, has placed on record that the OP refused to supply material from its MK unit to VV Minerals, but it supplied the same from MK unit to DCW Limited by bearing transporting costs, whereas other customers were supplied at ex-factory/base price, and the transportation cost was to be borne by the end-user. Further, it is alleged that OP had given preference in the supply of ilmenite to foreign customers/exports over Indian consumers, and the allocation of beach sand ilmenite by OP is not vide a transparent mechanism. Furthermore, the cost of production of beach sand ilmenite has more or less remained constant for last 3–4 years, but the price charged by OP for ilmenite has increased The Commission noted that the sale of ilmenite contributes significantly to the turnover of OP, and during the years 20 17–18 to 20 18–19, the profit before tax of the OP has increased from Rs. 12,385 lakhs to Rs. 20,062 lakhs and the revenue of the OP also increased from Rs 61,549 lakhs to Rs 81,663 lakhs for the respective period. Further, local consumers are apparently forced to accept the extraneous conditions mentioned in the Standard Quantity Sales Contract. The conduct of OP seems to have resulted in unfair/discriminatory conditions as well as pricing for domestic consumers and are prima facie in violation of the provisions of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Act. Further, the conduct also appears to be prima facie in contravention of the provisions of Section 4(2)(c) of the Act due to denial of input to the Informant’s members. On the basis of the material available on record, there appears to be substance in the allegations levelled by the Informant and the allegations prima facie violate the provisions of Section 4 of the Act, as detailed above and the same merit investigation by the Director General (DG).
Accordingly, the Commission directs the DG to cause an investigation to be made into the matter and submit an investigation report within a period of 60 days from the date of receipt of this order.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Information has been filed by Beach Mineral Producers Association (the Informant) under Section 19(1)(a) of the Competition Act, 2002 (‘the Act’) against IREL (India) Ltd. (Opposite Party/OP) alleging contravention of the provisions of Section 4 of the Act.
2. The Informant is a society registered under the Tamil Nadu Societies Registration Act, 1975, which was formed with the object of protecting the beach mineral industry in general and its members in particular.
3. As per the Informant, IREL (India) Ltd. (OP), a Miniratna Category-I Central Public Sector Undertaking, is engaged in mining and production of the following products:
