Case Nos. 55 and 56 of 2015. Case: Gujarat Industries Power Company Limited and Ors. Vs GAIL (India) Limited. Competition Commision of India

Case Number:Case Nos. 55 and 56 of 2015
Party Name:Gujarat Industries Power Company Limited and Ors. Vs GAIL (India) Limited
Counsel:For Appellant: Ritwika Nanda, Petal Chandhok, Advocates, Ashwin C. Shan, CS & DGM (Legal), K.S. Munshi and Alok Krishna Agarwal and For Respondents: Ramji Srinivasan, Sr. Advocate, Kapil Kher, Sara Sundaram, Advocates, Nitika Vaid, Representative of GAIL and Chandra Prakash, Manager (Marketing)
Judges:Ashok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter, U.C. Nahta, M.S. Sahoo and G.P. Mittal, Members
Issue:Competition Act, 2002 - Sections 19(1)(a), 26(2), 3, 4
Judgement Date:September 08, 2015
Court:Competition Commision of India
 
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Order:

Order under Section 26(2) of the Competition Act, 2002

  1. This order shall dispose of the informations filed by M/s. Gujarat Industries Power Company Limited ('GIPCL') in case No. 55 of 2015 and M/s. Gujarat State Fertilizers & Chemicals Limited ('GSFCL') in case No. 56 of 2015 (hereinafter, the 'Informants') under section 19(1)(a) of the Competition Act 2002 (hereinafter, the 'Act') against M/s. GAIL (India) Limited (hereinafter, 'OP') alleging, inter alia, contravention of the provisions of section 4 of the Act in both the matters.

  2. The Informant in case No. 55 of 2015, GIPCL, is a public limited company incorporated under the Companies Act, 1956 and has been engaged in the business of power generation. It is stated that to operate its 310 megawatt gas based power plant at Vadodara, GIPCL requires continuous supply of Re-Liquefied Natural Gas (hereinafter 'RLNG') of 1.65 Million Metric Standard Cubic Meter per Day ('MMSCMD'). The Informant in case No. 56 of 2015, GSFCL, is a public limited company incorporated under the Companies Act, 1956 and has been engaged in business of manufacture of fertilizers and chemicals since 1962. It requires RLNG as one of the primary inputs for its production activities.

  3. M/s. GAIL (India) Limited, the Opposite Party in both the cases, is a company incorporated under the Companies Act, 1956 and is engaged in distribution and marketing of gas including exploration, transmission, extraction and processing of natural gas and related products in India. It is stated to own a huge pipeline infrastructure for transportation of natural gas in India, stretching 10,977 kms with a capacity of 210 MMSCMD. Further, OP has a pan India presence with its pipeline covering several states such as Andhra Pradesh, Delhi, Goa, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Uttar Pradesh etc. having a turnover of around Rs. 32,500 crores. It is stated to own world's longest exclusive Liquefied Petroleum Gas ('LPG') transmission pipeline in Gujarat running from Jamnagar to Loni.

  4. Both the Informants purchase RLNG from M/s. Petronet LNG Limited (hereinafter 'PLL') which procures RLNG from M/s. Ras Laffan Liquefied Natural Gas Company Limited, Qatar (hereinafter, 'RasGas'). As per the information available on PLL's website, it is formed as a joint venture by the Government of India to import LNG and set up LNG terminals in the country. Its promoters are M/s. GAIL (India) Limited (i.e., OP), M/s. Oil & Natural Gas Corporation Limited (ONGC), M/s. Indian Oil Corporation Limited (IOCL) and M/s. Bharat Petroleum Corporation Limited (BPCL). As per the recitals in the Gas Sales Agreement (hereinafter, 'GSA') of OP with the Informants, OP has entered into a gas sales and purchase agreement ('GSPA') with PLL to purchase natural gas following regasification of LNG at PLL's Dahej Terminal purchased from RasGas. The Informants, vide their respective GSAs, have agreed to purchase and receive a part of OP's share of natural gas received at the Dahej Terminal at the delivery point.

  5. GIPCL and GSFCL have entered into GSAs with OP on 12.02.2004 and 17.01.2004 respectively, with similar terms and conditions. As per Article 9.3 of the GSA, mutual discussions were to be held between OP and its customers (Informants herein) to decide price of gas effective from 01.01.2009, but it is alleged that no such discussions were held. Both the Informants requested OP to provide them with a copy of draft GSA to be effective from 01.01.2009. The Informants were allegedly informed by OP that the agreements were non-negotiable. It was also urged that after 2009, OP continued to increase the price as the contract was silent on that point and ultimately in 2014 it became unviable for the Informants to operate on the prices set by OP. Thereafter, in 2015, OP raised huge demands running into crores of rupees for 2014 by invoking Article...

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