2019 (12) TMI 16 - Commission - Customs

Competition Commission Clears Export Policy Changes as Not Violating Competition Act

Beach Mineral Producers Association, Mr. V. Velmurugan Proprietor of M/s Phoenix Agency Versus Directorate General of Foreign Trade (DGFT), Indian Rare Earths Limited

The Competition Commission concluded that the changes in export policy and its implementation by the Directorate General of Foreign Trade and Indian Rare ... Violation of the provisions of Section 4 of Competition Act, 2002 - Anti competitive clauses - Appointment as State Trading Enterprise (STE) under Notification issued by DGFT - removal of the clauses in the SOP which are anti-competitive - direction to permit export of BSMs regardless of the Notification and the SOP, during pendency of the information - Commission notes that the Informant is mainly aggrieved by the policy of OP-1, which has brought exports of BSMs under STE regime, and allegedly onerous terms of SOP for exporters. HELD THAT:- The Commission observes that STEs deal with export/import of products in pursuance of government policies in relation to products/industries considered to have strategic importance. The Commission also notes that BSMs, inter alia, have space, defence and atomic applications and have also been specified as Atomic Minerals under the provisions of the MMDR Act and Prescribed Substances under the provisions of the Atomic Energy Act, 1962 - The Commission observes that the impugned allegations arise from the policy formulation by OP-1 regarding export of BSMs under the provisions of FTDR Act and FTP and implementation thereof by OP-3. Having looked into the nature of allegations raised by Informants the Commission is of the considered view that change in export policy by OP-1 in pursuance of its statutory duties and implementation thereof by OP-3 are not amenable for examination within the framework of Section 4 of the Act - the Commission is of the view that no case of contravention of the provisions of the Act is made out against OPs. Issues:Alleged violation of Section 4 of the Competition Act, 2002 by Directorate General of Foreign Trade (DGFT), Director General (DGFT), and Indian Rare Earths Limited (OP-1, OP-2, OP-3) regarding the export of Beach Sand Minerals (BSMs) under the State Trading Enterprise (STE) regime and the terms of the Standard Operating Procedure (SOP) for exporters.Analysis:1. Policy Formulation and Implementation:The Informants filed the Information against OP-1, OP-2, and OP-3, alleging a violation of Section 4 of the Competition Act, 2002. The Informants contended that the appointment of OP-3 as the STE for BSM exports and the terms of the SOP were anti-competitive and aimed at stifling competition in the market.2. Background and Context:BSMs are essential minerals with various applications, including in space, defense, and atomic industries. The Informants argued that the export policy changes by OP-1 and the subsequent implementation by OP-3 created barriers to exporters and amounted to an abuse of dominant position, violating the provisions of Section 4 of the Act.3. Legal Framework and Observations:The Commission carefully reviewed the Information, relevant documents, and public information available. It noted that BSMs are classified as Atomic Minerals and Prescribed Substances, emphasizing their strategic importance. The Commission observed that the allegations stemmed from the policy formulation by OP-1 and its implementation by OP-3 under the FTDR Act and FTP.4. Commission's Decision:After considering the nature of the allegations and the statutory duties of OP-1, the Commission concluded that the changes in the export policy and its implementation did not fall within the purview of Section 4 of the Act. As a result, the Commission found no contravention of the Act by the OPs and ordered the matter to be closed under Section 26(2) of the Competition Act, 2002.5. Order and Communication:The Commission directed the Secretary to communicate the order to the Informants, thereby closing the case. The decision highlighted the distinction between policy decisions made by regulatory bodies and actions that could be deemed anti-competitive under the provisions of the Act.This detailed analysis of the judgment provides a comprehensive overview of the issues raised, the legal framework applied, and the Commission's decision in the case involving the alleged violation of competition laws in the export of Beach Sand Minerals.