India’s Competition Authority Fines its Own State-Owned Coal Company $290 Million for Abusing Dominant Position

December 13, 2013

India’s competition authority, the Competition Commission of India (“the Commission”), imposed a fine of 17.7 billion rupees (or $290 million) on state-run coal mining company Coal India Ltd. (“CIL”) and three of its subsidiaries on December 10, 2013. In its one-hundred-plus-page Order, the Commission found that CIL had abused its dominant position as the country’s largest supplier of thermal coal—an input that is important to the continued growth of the Indian economy—by leveraging its power to enter into unfair supply agreements. See Case Nos. 03, 11 & 59 of 2012, Order under Section 27 of the Competition Act, 2002 (“the Order”). Thermal coal is India’s main fuel for electricity and is expected to continue playing this crucial role for the foreseeable future. Notably, the Order is one of the first pronouncements of the Commission and is the first order penalizing a state-owned company. Parties who engage in business dealings with state sponsored enterprises—in India and perhaps elsewhere in the region—should view the Order as a powerful reminder that state-sponsored enterprises must comply with competition laws.

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