TANGEDCO v/s COMPETITION COMMISSION OF INDIA AND ORS 2021 – An analysis.

Case title - TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION LTD. (TANGEDCO) v/s COMPETITION COMMISSION OF INDIA AND ORS

W.P. 35047 OF 2013

CORAM- MR. Justice S. M. Subramaniam

Petitioner- TANGEDCO

Respondent- CCI, Add. District General CCI and Southern Indian Engineering Manufacturers Association

BRIEF FACT OF THE CASE-

• TANGEDCO is owned by the Government of Tamil Nadu and Electric Supply and is engaged in both electricity generation and distribution. It operates four large thermal power station-Ennore thermal power station (ETPS), Mettur thermal power station (MTPS), and North Chennai thermal power station (NCTPS), Tuticorin thermal power station (TTPS) seems to have a dominant position in the relevant market.

• Southern Indian Engineering Manufacturers Association (SIEMA) sent a complaint to Competition Commission of India (CCI) in which it was alleged the TANGEDCO is abusing its dominant position by imposing discriminatory condition on the purchase of electricity and that this abusive action by TANGEDCO comes within the purview of Section 4 (2) (a) (i) “

  there shall be an abuse of dominant position…directly or indirectly, imposes unfair or discriminatory condition in purchase or sale of goods or services..”

  of the Competition Act 2002.

• On this the CCI found the it is evident prima facie that there abuse of dominant position by the TANGEDCO within the ambit of section 4(2) (a) (i) and found it fit case for Director General Investigation, where the Director General has to investigate the matter for violation of any provision of competition act and the said proceeding of the initiation states that “nothing stated in this order shall tantamount to a final expression of opinion on merit of the case and Director General shall conduct the investigation without being swayed in any manner whatsoever by the observation made therein”.

MATTER IN ISSUE-

• A notice under Section 41(2) read with Section 36 (2) of the Competition act 2002 CCI case no 38 of 2013 was issued to TANGEDCO dated 03/12/2013. And this very same notice is under challenge in this writ petition by the petitioner.

CONTENTION BY THE PETITIONER-

• The main contention of the petitioner was that the complaint which was filled by SIEMA to CCI is in itself invalid and that the Tamil Nadu Electricity Regulating Commission is empowered to adjudicate all subject matter related to efficient supply, securing or distribution.

• It was also contended that the provision of Competition Act is inapplicable as Electricity Act is a special Act and an effective redressal mechanism has been provided by establishing Tamil Nadu Electricity Regulating Commission and because of this there is no reason to entertain complain under the purview of CCI.

• The petitioner relied on Sec 2 (64) of the Electricity Act where ‘State Commission’ is defined which means the state electricity regulatory commission. Sec 23 was also relied upon where the section deals with the power of regulatory commission to regulate the supply, distribution, consumption or use of electricity thereof and here the power of CCI stands ousted and the notice given by the CCI to TANGEDCO to be improper and without jurisdiction.

• The petitioner in order to support his contention relied on the judgment of

  COMPETION COMMISSION OF INDIA v/s BHARTI AIRTEL LIMITED AND ORS (2019 SCC 521).

  Stated that the three kind of practice which are treated as anti-competitive are prohibited are enumerated in paragraph 83 of this case and the case of petitioner is not falling under any one of the three categories mentioned with reference to Competition Act and therefore the complaint filed by the SIEMA is untenable.

• GUJARAT URJA VIKAS NIGAM LIMITED v/s ESSAR POWER LIMITED (2008 SCC 755)-

  The Hon’ble Supreme Court of India held that the electricity act being a special statute would have overridden effect over the 1996 Act the general statute.

• Contended that the third party did not prefer any complain before the Tamil Nadu Regulatory Commission.

CONTENTION BY THE RESPONDET-

• In regard to the Sec 23 of the Electricity act, the respondent contended that it is not a regulatory body, the section confers to form policies which are not there and the power to impose penalty clause with reference to the abuse of dominance position is not traceable under the electricity act and therefore it is not overlapping. Competition law covers certain specialized area in order to deal with certain nature of complaint and to conduct investigation for initiation of further action.

• In regard to the case of

  CCI v/s BHARTI AIRTEL LIMITEDAND ORS

  on which the petitioner relied it was stated that to be evident prima facie case was made out regarding abuse of its dominant position by imposing discriminatory condition on the sale of electricity.

• There being no monitoring provision/investigating mechanism under the electricity act, sec 4 of the Competition Act 2002 stand-alone provision which is specific to regulate such situation.

• It was stated that if the writ petitioner is able to establish that the subject must be adjudicated before the Tamil Nadu Electricity Regulatory Commission, then the commission itself has the power to refer the issues to statutory authority.

• Is an allegation has been raised of abuse of dominant position under sec 4 of the Competition Act the CCI is empowered to institute such action.

VERDICT AND ANALYSIS OF THE COURT-

• The court stated that TANGEDCO (writ petitioner) is an enterprise as per Sec 2(h) of Competition Act 2002.

• In regard to the complaint made by SIEMA to the CCI the court affirmatively stated that the difference in load shedding in Chennai and other parts of Tamil Nadu was enormous; where Chennai was facing 2-3 hrs. of load shedding the other parts were facing 14-16 hrs load shedding which will have an adverse effect on the functioning of the industries. This served as the prima facie case of abuse of dominance position by TANGEDCO.

• This abuse make it well fit for the investigation of Director General Investigation. The report was directed to be submitted within sixty days from receipt of the order; it was clarified that nothing stated in this order shall be tantamount to a final expression of opinion on merit of the case.

• The court held this writ petition by the petitioner to be pre-mature and not entertainable.

• The court stated that the notice issued provided an opportunity to the petitioner to defend their case under the provision of Competition Act 2002.

• The writ petitioner was directed to co-operate with the investigation for early disposal of the case and respondents were also directed to proceed with the investigation and conclude the investigation by affording opportunity to the petitioner and conclude the investigation and further proceeding within the period of our month from the date of the receipt of the copy of the order.

CONCLUSION-

Thus, Madras High Court through an order dated 22nd December 2021 has dismissed the writ petition by TANGEDCO in 2013 challenging a decision taken by CCI to inquire into the complaint received about the abuse of dominant position in the relevant market.

Judgement available at- https://www.cci.gov.in/legal-framwork/judgements