CCI slaps record fine on South Asia LPG

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The order and record fine imposed by the Competition Commission of India (CCI) in the South Asia LPG (SALPG) case significantly lays down a framework for companies to access indispensable infrastructure in future, said a partner at Dua Associates, who advised the counterparty in the matter.

The CCI slapped a ₹192 million (US$2.7 million) fine on SALPG – the highest imposed by the CCI in any abuse of dominance matter. The CCI’s order penalized SALPG for abusing its dominant position in upstream terminal services for liquid petroleum gas (LPG) imports at Vishakhapatnam port.

“This order lays the framework for providing access to indispensable infrastructure to enterprises that cannot compete without such access, and can have far-reaching consequences in many sectors,” said Kunal Mehra, a partner at Dua Associates who advised East India Petroleum (EIPL), the company that filed the case against SALPG.

The regulator stated that “impositions by SALPG have priced out EIPL and reduced its business volumes substantially” and that its conduct, being without reasonable grounds, contravened section 4 of the Competition Act, 2002.

SALPG has not yet indicated whether it would file an appeal. “While each case presents its own peculiarities, this case is significant not just in the competition law jurisprudence of India, but also in how businesses in control of indispensable infrastructure operate,” said Mehra.

EIPL filed the case in 2011, alleging that its competitor SALPG had denied it blending facilities. EIPL stated that SALPG had insisted on the use of a cavern for blended LPG (butane and propane), which was imported and blended at Vishakhapatnam port. This resulted in oil marketing companies such as Indian Oil and Bharat Petroleum paying SALPG significantly higher terminal charges. They were thus confined to SALPG’s terminal services.

“Our biggest challenge was to expose the fallacies in SALPG’s defence that access to the infrastructure would raise safety concerns,” Mehra told Asia Business Law Journal. “Another challenge was to convince the CCI that what EIPL was seeking would ultimately benefit consumers.”

The matter went on for seven years with investigations and multiple rounds of litigation prior to the CCI’s order in July.

In addition to Mehra, the Dua team consisted of senior associate Danish Khan with strategic input from senior member Shashivansh Bahadur. The firm also engaged senior advocate AN Haksar. J Sagar Associates represented SALPG. The team was led by partners Amitabh Kumar and Vibha Dhawan, and associate Diksha Rai.