CCI orders investigation against Gujarat State Load Dispatch Centre for abuse of dominance*

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Mar 16, 2018

CCI orders investigation against Gujarat State Load Dispatch Centre for abuse of dominance*

On January 31, 2018, CCI directed investigation against Gujarat Energy Transmission Corporation Limited (‘GETCO’), State Load Dispatch Centre, GETCO Gujarat (‘SLDC-GETCO’), and Paschim Gujarat Vij Company Limited (‘PGVCL’) based on an information filed by HPCL-Mittal Pipelines Limited (‘HPCL’) alleging abuse of dominance under Section 4 of the Competition Act.HPCL, an industrial electricity consumer, had sought permission from SLDC-GETCO to procure electricity through ‘open access mechanism’ as provided for under the Electricity Act, 2003 (‘Electricity Act’). The open access mechanism allows large users of electricity to purchase cheaper power from a source other than the distribution licensee licensed to supply power to a particular area. Pursuant to the Electricity Act, SLDC-GETCO is the sole authority entrusted with the power to approve or disapprove open access requests. It was alleged by HPCL that SLDC-GETCO indiscriminately rejected its requests for open access transmission on 12 different occasions, even though HPCL had satisfied all the pre-requisites, on various grounds that were unfair, unreasoned and reflected non-application of mind. Further, HPCL alleged that the requests were rejected by SLDC-GETCO in order to ensure that HPCL only sourced its demand of electricity through PGVCL, a subsidiary of SLDC-GETCO, engaged in the downstream market for distribution and retail sale of electricity. HPCL alleged that SLDC-GETCO imposed unfair and discriminatory conditions by denying open access permission and thereby restricting the production of electricity, denying market access to the power generators, and manipulating the downstream distribution market in favor of its subsidiary (i.e. PGVCL).CCI delineated the relevant market as the ‘market for services relating to use of transmission facility for availing open access electricity in the State of Gujarat’. It observed that SLDC-GETCO held 100% market share in this market, being the nodal agency having the sole prerogative to allow open access permission. Therefore, SLDC-GETCO was held to be in a dominant position in the relevant market.CCI found irregularities and lack of a justifiable cause in SLDC-GETCO’s conduct. CCI was of the prima facie view that SLDC-GETCO had leveraged its dominant position in the relevant market for use of transmission facility to adversely affect the competition in the downstream market, where it was present through its group entity PGVCL. CCI found that such unreasonable and exclusionary conduct warranted investigation under Section 4 of the Competition Act.

*Case No. 39 of 2017.

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