Keeping up with Competition - July 2025
A monthly newsletter by Axiom5
Welcome to the twenty-second edition of our monthly newsletter, Keeping Up With Competition. June 2025 was a relatively quiet month for the Competition Commission of India (CCI) in terms of new orders, but there were still significant developments. The CCI concluded a major case involving copper producers Hindalco and Vedanta, which provided important insights into the concept of collective dominance in India and the reasonableness of conditions in volatile markets. Additionally, the CCI approved nine merger notifications, demonstrating its ongoing efficiency and dedication to improving the ease of doing business in the country. The following section provides a more in-depth look at the order of the CCI.
CCI Closes Case Against Hindalco and Vedanta, Citing No Collective Dominance (order available here.)
The CCI recently closed a significant case concerning alleged anti-competitive practices by Hindalco Industries Limited (Hindalco/OP-1) and Vedanta Limited (Vedanta/OP-2) (collectively OPs). The informants, Airen Metals Private Limited (Informant no. 1) and Airen Copper Pvt. Ltd. (Informant no. 2) (collectively Informants), who regularly purchased refined copper, had accused the two copper companies of violating Sections 3 and 4 of the Competition Act, 2002 (Act).
According to the Informants - Hindalco and Vedanta operate as a duopoly, dominating approximately 75% of India's refined copper market over the last three decades. Specifically, Hindalco is reported to hold a 55-62% market share, while Vedanta accounts for 18-22% of the country's annual refined copper consumption of 6.6 lakh tonnes.
The Informants raised the following concerns:
Opaque and Unfair Pricing: OPs allegedly forced buyers to book copper at an unknown London Metal Exchange’s (LME) Cash Settlement Price (CSP), while OPs immediately hedged, preventing buyers from benefiting from price drops.
Identical Marketing Policies: Both OPs had similar policies allowing them to liquidate bookings and recover losses if customers did not lift the copper, hinting at coordinated behavior.
Burden on Purchasers: Buyers were required to provide a booking margin/Bank Guarantee (BG) of 5-10% and faced "Mark to Market" (MTM) payments if LME prices fell.
Premature BG Invocation: During the COVID-19 pandemic, the OPs allegedly invoked BGs worth INR 50.35 crores almost simultaneously, despite sufficient time until expiry. This, the Informants claimed, was a concerted abuse of dominant position, leading to their bank accounts being overdrawn and forcing them into the Corporate Insolvency Resolution Process (CIRP).
Unshared Profits: The Informants contended that OPs recovered losses from unlifted copper but did not share profits from de-pricing these volumes, citing gains of over INR 7.37 crores for Hindalco and over INR 36 lakhs for Vedanta from such actions.
CCI’s Observations: No collective dominance, and commercial prudence
No Collective Dominance under Act: In its assessment, the CCI reiterated that the Act does not envisage the concept of ‘collective dominance’. As such, the allegations against Hindalco and Vedanta, described as operating a duopoly, were deemed to fall outside the scope of the Act. This position aligns with the CCI’s established jurisprudence over the past several years, which has consistently held that collective dominance is not covered under the current legal framework (see Sonam Sharma and Sanjeev Rao).
Commercial Prudence, Not Abuse: The CCI found that Hindalco had given the Informants multiple opportunities to fulfil the purchase. It held that in a volatile commodity market, conditions allowing sellers to de-price and recover losses for unfulfilled contracts are not inherently unfair. Such clauses manage price risks for sellers, and buyers defaulting on terms cannot benefit from their own non-performance.
Civil Dispute: The CCI viewed the issues related to the premature invocation of BGs as civil and contractual disputes between the parties, and these types of disputes ordinarily did not require its intervention. The CCI also noted that the police had filed Final Reports on FIRs lodged by the Informants against OP-1, considering those disputes civil in nature. In the past, the CCI assessed the use of BGs on a case-by-case basis, considering the specific facts and business justifications to determine whether the demand for excessive or use of BGs leads to a contravention of the Act. (see Imperia Structures Limited and Sai Wardha Power Company Limited).
Based on its analysis, the CCI concluded that there was no prima facie case of contravention of Section 4 of the Act. As a result, the CCI closed the matter and rejected the request for interim relief under Section 33 of the Act.
Implications
This decision solidifies the CCI's stance on "collective dominance" not being covered under the Act. It underscores that standard commercial practices for managing price risks in volatile commodity markets, even if strict, are unlikely to be deemed anti-competitive unless clear abuse of a single entity's dominant position or a cartel is proven. Disputes rooted purely in contractual breaches, such as BG invocations, will likely continue to be directed towards civil redressal mechanisms. This ruling sets a helpful precedent, drawing a line between commercial risk management and anti-competitive conduct.