2013 (4) TMI 441 - Commission - Companies Law

Unfair trade practice - Application is filed u/s 19(1)(a) of the Competition Act, 2002 alleging inter-alia contravention of Sections 3 and 4 of the Act. Informant association alleged that OP 1, the largest mineral (iron ore) producer in India, abused its dominant position and colluded with the other opposite parties this affected competition in the iron ore production market in India. Held that It is necessary to consider as to what will be the relevant market in this case. Having regard to these facts and circumstances, the Commission is of the view that the relevant market in this case would be the market of iron ore production/supply in India and OP 1 (which holds only 16% for the year 2011-12) is not a dominant player in this market. The Commission considered the facts and data placed on record by both sides and is of the view that the relevant market definition proposed by the informant cannot be accepted. The informant has inflated the market share of OP 1 by excluding captive iron ore production, low grade iron ore having less than 60% Fe content and exports from the relevant market definition. This indicates that the relevant market was much broader than the one proposed by the informant. However the relevance of determining relevant market and dominance of an enterprise is only there in free markets. Where mining activities was being done as per the orders of the Supreme Court and pricing was looked after by another Committee, determination of relevant market may not be appropriate. The Commission is not convinced that there existed a deliberate reduction in production in view of the Supreme Court orders. Prima facie there seemed to be no collusion between OP 1 and other private parties and no competitive issue was there that required intervention of the Commission. There is no case either under section 3 or under section 4 of the Act. The case deserves to be closed under section 26 (2) of the Act and is accordingly hereby closed.

Summary

Issues:
Alleged abuse of dominant position and collusion in iron ore production market in India under Sections 3 and 4 of the Competition Act, 2002.

Analysis:

Issue 1: Relevant Market Definition
The informant proposed a relevant market for 'non-captive iron ore with more than 60% Fe content excluding exports' in Indian states except Goa. The informant alleged OP 1's dominant position based on market share data. However, OP 1 contested this, arguing that the relevant market should include total iron ore production in India. The Commission found the informant's market definition flawed, noting that low-grade iron ore could be utilized by steel manufacturers with beneficiation processes. The Commission broadened the relevant market to 'iron ore production/supply in India,' where OP 1's market share was only 16% in 2011-12, concluding OP 1 was not dominant.

Issue 2: Dominance Assessment
The informant's reliance on OP 1's 43% market share of high Fe content iron ore was deemed inconclusive for dominance determination. The Commission highlighted that market share alone is not a conclusive test of dominance under Section 19(4) of the Act. Other factors must be considered in conjunction with market share. The Commission concluded that OP 1 was not a dominant player in the broader iron ore production market in India.

Issue 3: Alleged Violations under Sections 3 and 4
The informant alleged collusion and restricting supply under Sections 3 and 4 of the Act, asserting a case of limiting production to increase prices. OP 1 refuted these claims, stating that data collection by JPC was for industry growth. The Commission found no evidence of deliberate production reduction due to Supreme Court orders and no collusion between OP 1 and private parties. Consequently, the Commission did not find a prima facie case for intervention under Sections 3 or 4, closing the case under Section 26(2) of the Act.

In conclusion, the Commission rejected the informant's allegations of abuse of dominant position and collusion in the iron ore production market in India. The Commission determined that OP 1 was not dominant in the relevant market and found no evidence of anti-competitive practices warranting further investigation under the Competition Act, 2002.