July 14, 2018

Competition Commission slaps Rs 19 cr fine on SALPG


The Competition Commission of India (CCI) has slapped a penalty of Rs 19.07 crore on South Asia LPG Company Pvt Ltd (SALPG) for "abuse of dominant position" in terminalling services at Visakhapatnam Port while holding that it would not force competitors to use any of the infrastructure components including storage facilities, an official order said on Wednesday.

The order came in a dispute between SALPG and East India Petroleum Pvt Ltd (EIPL) that accused the former of abusing its dominant position in forcing it to use its cavern (storage) facility along with the blender (where propane and butane are blended into LPG), and filed a case under Section 19(1)(a) of the Competition Act, 2002.

The LPG terminalling infrastructure at Vishakhapatnam Port, being operated by SALPG, is used for handling imports of propane and butane and their blending into LPG and comprises several components such as the unloading arms at the jetty, blender, heat exchanger and cavern.

"The EIPL filed information with CCI alleging that while allowing it to use the blender, SALPG has been insisting on mandatory use of cavern. This resulted in paying significant charges to SALPG.

"The oil marketing companies (OMCs) were thus not finding the LPG terminalling services offered by EIPL economically viable and were constrained to avail the terminalling services offered by SALPG only," the CCI said in its order.

The EIPL had proposed to take the output directly to the cross-country pipeline, bypassing the cavern but SALPG allowed bypass of cavern to the extent of 25 per cent only.

The EIPL then proposed to install its own blender, and sought a tap-out and tap-in from the propane and butane lines to discharge blended LPG, bypassing the cavern. This was also not accepted by SALPG.

Another proposal seeking tap-out from the propane and butane lines at jetty to EIPL's own blender and construction of its own infrastructure between the blender and storage facility was also refused by SALPG. All this was alleged to be abuse of dominant position by SALPG.

SALPG sought to justify its conduct on the grounds of safety as well as efficiency and business justification.

However, after a detailed examination of claims and hearing the parties, the CCI held the conduct of SALPG to be in contravention of the provisions of Section 4 of the Act.

The CCI directed that SALPG shall not insist mandatory use of its cavern and shall allow bypass of cavern for both pre-mixed and blended LPG, without any restrictions.

Alternately, the order said, the SALPG shall allow access to its competitors to the terminalling infrastructure at Visakhapatnam Port, provided that the entity seeking access shall bear the cost, if any, towards necessary changes to the existing infrastructure.

"Under this option also, SALPG shall not insist on mandatory use of cavern and it shall allow bypass of cavern, without any restriction... SALPG shall not do anything raising rival's cost," it said.

(Credit: IANS)

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