Competition Commission of India (CCI) issues order against South Asia LPG Company Pvt. Ltd. (SALPG) for abuse of dominant position for terminalling services at Visakhapatnam Port- (Press Information Bureau) (11 Jul 2018)

MANU/PIBU/1035/2018

MRTP/ Competition Laws

The case primarily concerned access to upstream LPG terminalling infrastructure at Vishakhapatnam Port, which comprises several components viz. unloading arms at the jetty, blender, heat exchanger and cavern (storage facility). This infrastructure, being operated by SALPG, is used for handling imports of propane and butane and their blending into LPG.

East India Petroleum Pvt. Ltd. (EIPL) filed an information with CCI under Section 19(1)(a) of the Competition Act, 2002 (Act) alleging that while allowing it to use the blender, SALPG has been insisting on mandatory use of cavern. This resulted inpaying significant charges to SALPG. The 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. To address this, EIPL first proposed to use the blender of SALPG and thereafter, take the output directly to the cross-country pipeline, bypassing the cavern. Since this was not agreeable to SALPG which allowed bypass of cavern to the extent of 25 percent only, EIPL 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 acceptable to SALPG. Another proposal seeking tap-out from the propane and butane lines at jetty to EIPL 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.

After a detailed investigation by the Director General, CCI conducted further inquiry in the matter and found SALPG enjoys dominant position in the market for upstream terminalling services at Visakhapatnam Port. 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 made and hearing the parties, the Commission held the impugned conduct of SALPG to be in contravention of the provisions of Section 4 of the Act. Accordingly, CCI directed that:

(a) 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; and/or

(b) SALPG shall allow access to its competitors, potential as well as existing, to the terminalling infrastructure at Visakhapatnam Port, subject to compliance with all safety integrity and other requirements under applicable laws and regulations framed thereunder. Such an access should avoid additional cost burden on SALPG, and 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 extend full cooperation for the study/audit undertaken by VPT in relation to the remedies ordered herein. Needless to say, SALPG shall not do anything raising rival's cost.

A penalty of INR 19.07 crore has also been imposed on SALPG for indulging into the anticompetitive conduct.

Tags : ORDER ISSUANCE ABUSE DOMINANT POSITION