CCI dismisses abuse of dominance claims against Hindalco, Vedanta in copper supply market

The Competition Commission of India (CCI) recently dismissed a complaint filed against Hindalco Industries and Vedanta, alleging abuse of their dominant position in the Indian refined copper market..The CCI held that the allegations did not warrant investigation under Section 4 of the Competition Act, 2002.The informants had accused Hindalco and Vedanta - who together account for nearly 75% of India’s refined copper market - of acting in concert to impose unfair terms through their marketing policies and of invoking bank guarantees prematurely during the COVID-19 lockdown, which allegedly forced them into insolvency..According to the informants, companies purchasing refined copper (such as copper wire rods and cathodes) from Hindalco and Vedanta must book orders at an “unknown price” linked to the London Metal Exchange’s (LME) cash settlement price. The suppliers allegedly engage in back-to-back hedging and impose carry-over charges and the right to liquidate bookings if customers fail to lift material on time.The informants claimed that they had placed copper orders with Hindalco and Vedanta to meet supply obligations to Bharat Heavy Electricals Limited (BHEL) and the Central Organisation for Railway Electrification (CORE). However, following the pandemic, they were unable to lift 933.13 MT of copper from Hindalco and 92.28 MT from Vedanta. Despite the bank guarantees having remaining valid and the invoices still being within the permissible payment period, both Hindalco and Vedanta invoked guarantees worth ₹50.35 crore in July 2020.They further alleged that the premature invocation led to overdrafts and account freezes, resulting in the companies undergoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.While the Commission noted that India’s refined copper market has duopolistic features, it clarified that the concept of collective dominance is not recognised under the Act. Therefore, allegations based on joint conduct by Hindalco and Vedanta could not be examined under the current statutory framework.The CCI also took into account a series of email correspondences from Hindalco to the informant, which showed repeated requests for a liquidation plan. Only after no response was received did Hindalco de-price the booked material. The Commission observed:“Several chances were given by OP-1 to Informant No.1 for lifting the material, and only after the failure… it was de-priced by OP-1.”Regarding the marketing policy provisions that allowed the suppliers to de-price bookings and recover losses, the Commission said:“Such condition in the commodity market which is prone to price risks cannot be considered to be unfair.”It further noted that any gains retained by sellers in such scenarios arose only when buyers failed to meet contractual obligations:“The buyer who has not followed agreed terms and conditions of the contract cannot take advantage of its own default.”As for the alleged premature invocation of bank guarantees, the CCI found the matter to be a civil and contractual dispute, which did not merit intervention by the Commission..[Read order]