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2015 (3) TMI 725 - COMPETITION COMMISSION OF INDIAAbuse of dominant position in supply and distribution of natural gas - Contravention of the provisions of section 4 of the Competition Act - Report of the DG - Unilaterally terms and conditions in Gas Sales Agreement - Held that:- In the result, the Commission is of opinion that the relevant market in the present case is the market of supply and distribution of natural gas to industrial consumers in the district Faridabad. In the present case, the Commission observes that the opposite party has 100% market share in the relevant market being the only entity authorized by Government of Haryana to set up and operate CGD network in Faridabad. Further, it appears that distribution of natural gas is regulated by the Petroleum and Natural Gas Regulatory Board (PNGRB) established under the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act). As per the provisions of the PNGRB Act and the regulations framed thereunder, PNGRB is empowered to register and authorize downstream market activities such as laying, building and operating natural gas distribution networks, ensure access to customers on a common carrier basis, register entities to market natural gas subject etc. It may also be noticed that the regulations contain provisions to grant 25 years infrastructure exclusivity to lay, expand or operate a CGD network. Moreover, the Authorization Regulations provide up to three years marketing exclusivity from the date of authorization to an existing CGD networks and five years from the date of authorization to a new CGD network from the purview of common or contract carrier, after which there is a provision for "open access", which allows competition and choice to the consumer. In the aforesaid circumstances and after further taking into account the absence of any countervailing buying power, market structure and size thereof as also the entry barriers, the Commission holds the opposite party to be in dominant position in the defined relevant market. It may be noted that though clause 11.2.4 absolves the opposite party from consequential damages in the event of disruption of supply, clause 21.5 (Exclusion of Consequential Loss) of GSA executed between the opposite party and its industrial consumers provides that neither party shall be liable for any indirect, incidental or consequential loss or damage or loss of opportunity or profits. Moreover, this clause is a reflection of the upstream agreement of the opposite party with its supplier i.e. GAIL. In these circumstances, it may be observed that the impugned clause, in light of conspectus of various clauses as discussed, appears to be evenly balanced and no contravention of the Act can be found on this count. The Commission is of the opinion that the clause regarding likely termination of contract by the opposite party on account of failure to off-take 50% or more of the cumulative DCQ by the buyer during a period of 45 consecutive days as against the longer period available to the opposite party from GAIL, amounts to imposition of unfair conditions in contravention of section 4(2)(a)(i) of the Act. As the opposite party had uniformly stipulated the said condition in the GSAs executed with all its industrial consumers, the allegations of the informant regarding discriminatory conduct of the opposite party in terms of section 4(2)(a)(i) of the Act is not made out. In view of the above discussion, the Commission is of opinion that the opposite party has contravened the provisions of section 4(2)(a)(i) of the Act by imposing unfair conditions upon the buyers under GSA. Order issued to opposite party to cease and desist from indulging in conduct which is in contravention of the provisions of the Act and to modify in gas supply agreement accordingly.
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