© 2015 Talking Competition. All rights reserved.Disclaimer-The thoughts and opinions mentioned in the present article are those of the Talking Competition Team. The present opinion should not be construed as legal advice. For more information, please contact Anand Sree at [anand@competitionlaw.co.in] or Danish Khan [danish@competitionlaw.co.in]. The present article is protected by Copyright Law(s).

Under the extant provisions of Electricity Act, 2003, only the licensed distribution company is allowed to distribute electricity to consumers in a particular area. Although regulatory mechanism allows for more than one licensee in a particular area, the same has not materialised in most States due to high entry barriers. As such, there exists no alternative for the consumers other than to purchase electricity from the distribution licensee operating in the area. Consequently, the geographic markets are restricted to the licensed area of specific distribution licensees.


In subsequent cases involving the electricity sector, the CCI has adopted a similar approach in defining the relevant market.
[5]


                                                          VOLUME II:  RELEVANT MARKETS IN POWER/ENERGY


Information(s) pertaining to the power sector in India have mostly involved allegations of abuse of dominant position by power distribution companies. The power sector can be further dissected into the electricity and natural gas markets for ease of examination.

The Competition Commission of India (CCI) has generally differentiated electricity from other sources of energy and has considered it to be forming part of a distinct product market on account of its specialized nature and unique physical characteristics.[1]  Further, alternative sources of electricity like solar power are not considered as adequate substitutes for electricity supplied by power distribution companies.

The CCI  further divides[2] the electricity market in India into the following different product markets:

  1. Generation of electricity in power stations
  2. Transmission of electricity over high-tension networks[3]
  3. Distribution and supply of electricity to final consumers


The approach is consistent with that adopted by the European Commission.[4]














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END NOTES:

[1] CCI Case No. 6 of 2009 Shri Neeraj Malhotra v. North Delhi Power Ltd & Ors.

[2] CCI Case No. 6 of 2009 Shri Neeraj Malhotra v. North Delhi Power Ltd & Ors., Para 14.5.

[3] CCI Case No. 76 of 2014 BEST v. Tata Power Company Limited, Para 5.

[4] Case No COMP/M.1673 – VEBA/VIAG

[5] Majority Order in CCI Case No 19 of 2008 Suomoto v. North Delhi Power Ltd. & BSES & Ors.; CCI Case No 06 of 2010 Ms. Anila Gupta, Mumbai v. BEST Undertaking, Mumbai, Para. 10.1.

[6]  CCI Case No. 94 of 2013

[7] CCI Case No 71 of 2012 Faridabad Industries Association v. M/s Adani Gas Limited , Para 56.



The CCI has made a differentiation between different categories of consumers, considering supply of natural gas to each category of consumer as forming a distinct product market. In Faridabad Industries Association (FIA) v. M/s Adani Gas Ltd.,[7] since the allegations pertained to anti-competitive conduct in the supply of natural gas, the relevant product market was defined with respect to “supply and distribution of natural gas”. Further, the CCI distinguished between industrial consumers, domestic consumers, commercial consumers and transportation consumers on the basis of intended usage, price and technical considerations involved in the supply and distribution of natural gas to each category. Thus, the relevant product market in this particular case was determined as “market for supply and distribution of natural gas to industrial consumers”. With regard to the geographic market, the area allotted to the service provider by the State Government to operate a City Gas Distribution Network was deemed to be the relevant geographic market, similar to the approach in the electricity sector.

[1 MAY 2015]- [UPDATE-1]-In its latest decision in power sector, the CCI has followed its earlier decisional practice by differentiating natural gas on the basis of industrial and domestic consumer.  Further,  CCI considered government administered price gas for industrial consumers a separate product than natural gas falling outside price control. As regards the geographic market, the area allotted to gas service providers to operate a City Gas Distribution network was deemed to be the relevant geographic market, consistent with earlier approach.

NOTE: THIS SERIES SHALL BE UPDATED AS AND WHEN NOTABLE ORDERS ARE PASSED BY THE CCI. KEEP VISITING THIS SPACE TO STAY UPDATED

Natural Gas is considered as a separate non-substitutable product by the CCI. Within the sector, the CCI has been following the approach similar to the electricity sector. In TATA Power Delhi Distribution Ltd. v. M/s GAIL (India) Ltd.,[6] the market for transmission of natural gas was considered to be forming a separate relevant product market. However, as far as geographic market was concerned, the CCI considered it as national, citing homogeneous conditions of supply.

[19 Feb 2015]  [Anand Sree & Danish Khan]

We continue with the analysis of the CCI orders for its outlook on the relevant market in various industry sectors

Read Volume-I about the relevant markets in Real Estate sector here




Relevance of the Relevant Market: The Indian Experience

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