CASE ANALYSIS FARIDABAD INDUSTRIES ASSOCIATION VS. ADANI GAS LTD
CASE ANALYSIS ; FARIDABAD INDUSTRIES ASSOCIATION VS. ADANI GAS LTD
INTRODUCTION:
The Faridabad Industries Association (FIA), the case's informant, is a 500-member association of Faridabad-based industries that is recognised by the Societies Registration Act of 1860. The sectors comprise steel, alloys, textiles, medical equipment, automobile components, etc.
The defendant is M/s Adani Gas Ltd. (AGL), a business that was established and registered under the Companies Act of 1956. Its primary activity is the establishment of distribution networks in several locations to supply natural gas to consumers who use it for residential, commercial, industrial and CNG purposes.
FACTS:
With arbitrary, unjust, and discriminatory terms and conditions of the Gas Sales Agreement, the FIA accuses AGL of abusing its dominant power in the relevant market of natural gas supply and distribution in the Faridabad district. The conditions put the buyers of natural gas in Faridabad in a "take it or leave it" situation and were wholly against the law of contracts. The corporation framed the agreement in a way that left no room for the FIA, who are essentially defenseless purchasers who are reliant only on the supplies of the other party. The Director General was instructed by the commission to look into the matter and provide a report within 60 days of receiving the order. The investigation came to the conclusion that the informant's claims that the defendants had raised petrol prices arbitrarily and irrationally could not be seen as an abuse of their dominating position.
ARGUMENTS ADVANCED:
Informant’s side:
It was argued that a dominant firm could only abuse its power to force a buyer to sign a sale agreement with unfair or discriminatory conditions, and that this would constitute abuse of dominance under the Act. The informant emphasized that the agreement gave the customers no right at all to request a certificate of quality from the supplier of the other party or to request documentation of the same with the certificate.The informant argued that the material supplied by the informant contained particular examples of inappropriate pricing, which the DG had neglected to analyse.The informant also argues that the defendant's own fluctuations in the price of petrol as an input cost lead to unreasonable and arbitrary pricing practices in the tariff and margins.
Respondent side:
Since these were contractual conflicts, the defendant refuted the informant's claims that they raised any competition law difficulties.As a result, it was argued that the information's very maintainability is in doubt because the conditions of the aforementioned agreement were solely commercial in nature and cannot be contested under the Act. It was argued that the informant had not demonstrated any negative impact on competition as a result of the defendant's claimed abusive provisions of the agreement. It was argued that natural gas can be substituted with other fuels such as coal and lignite, liquid fuels, and grid electricity because its main uses are for heating, chilling, and electrical generation.
RATIO:
The commission believed that by putting unfair and discriminatory conditions on the sale or purchase of goods, the other party had violated Section 4(2)(a)(i) of the Act.
The following is the order that the Indian Competition Commission issued:
1. The opposite party has to cease and desist from indulging in activities that are
in contravention of the provisions of this act under this order.
2. GSA has to be modified by the findings and observations recorded under this order.
According to the ruling issued by the Competition Commission of India, the defendant is required to stop engaging in any actions that are against the terms of this act. The opposite party (AGL) made certain essential revisions to the agreement during the investigation and while the case was pending, but the commission felt that only a small number of the agreement's clauses had been found to be in violation of the Act. Based on the available information, the commission determined that a penalty of 4% of the average turnover for the previous three years would be applied. Within sixty days of the order of receipt, the defendant was obliged to amend the terms of the agreement.
CONCLUSION:
It is critical to evaluate the true impact of seemingly unjust and arbitrary words within the relevant legal and business context when analyzing their imposition in agreements. The appraisal ought to take into account the conditions, negotiating power, and positions of all parties involved. Faridabad was considered a good geographic market for Adani Gas, which operates a CGD Network in an area where the Haryana government has licenced only one service provider.