The order of the Competition Commission of India (CCI) in the South Asia LPG (SALPG) case was significant as it lays down the framework for companies to access indispensable infrastructure, 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 terminalling 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.
Word on whether SALPG would file an appeal was awaited. “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 terminalling charges. The oil marketing companies were thus confined to SALPG’s terminalling services.
To address this situation, EIPL proposed a number of arrangements, all of which SALPG rejected. Since these measures were refused, EIPL alleged that SALPG was abusing its dominant position.
“Our biggest challenge was to expose the fallacies in SALPG’s defence that access to the infrastructure would raise safety concerns,” Mehra told India 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. The regulator imposed a fine of 10% of the average annual relevant turnover of the preceding three years on SALPG – the maximum fine the CCI can impose.
The regulator also issued behavioural remedies directing SALPG to grant EIPL and any other existing or potential competitor access to its terminalling infrastructure in Vishakhapatnam port.
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.