“OMC can adopt any methodology of price setting for chrome ore depending on the market conditions”
The Competition commission of India (CCI) has rejected the petition by the All Odisha Steel Federation (AOSF) against the Odisha government owned Odisha Mining Corporation (OMC) for abusing its dominant position to fix high prices of Chrome ore and intentionally restricting chrome production to generate high price. In its judgement the CCI has stated that the PSU is not abusing its dominant position to set unreasonably high prices and the price fixing mechanism and the conditions imposed by the company cannot be said unjustified.
Last year the All Odisha Steel Federation had filed the petition before the CCI against OMC. In the petition AOSF had alleged that the PSU had been setting prices of Chrome ore through price setting tender(PST) based on the H1 price of a very small portion of Chrome ore available for sale. This method was prevalent till mid 2012. Since July 2012 OMC is conducting e-auction for the ore, but the federation has alleged that OMC has been keeping reserve price very high and it has no relation with the production cost of the company. The federation had also put question mark on the process of impaneling certain buyers for supply of chrome ore and had termed it as illegal. The petitioner had also alleged that OMC is willfully restricting its chrome production to create scarcity and raise prices.
After getting the petition the Commission had directed its director general (DG) to conduct an investigation and subsequently the DG conducted an investigation and submitted the report on 28th March 2013.
Highlights of the report
1. OMC has not abused its position of dominance with regards to the issues and there is no case of abuse of dominant position.
2. The PST method of fixation of price by OMC, in cases where it has not accepted the H1 rates cannot be said to be unreasonable or unfair.
3. DG has found that the price charged by OMC under different methods such as PSTs, and e-auction are not unreasonable as it were based on the prevailing market conditions and the price of ferro chrome in the international market. It has been found that whenever OMC felt that its prices are not in consonance with the market condition it has adopted different price mechanism so as to offer the chrome ore at a lower price. The adoption of e-auction in place of PST in 2012 is an example of the same.
4. Moreover, since chrome ore is a mineral, finding its correct economic value is a difficult task. In fact, the raising cost and royalty do not represent the intrinsic worth
of the mineral or their market value. Since, the supply of chrome ore is limited; setting limit of its price is also difficult. Thus, it cannot be said that the price set by
OMC is excessive and therefore unfair. Also as per the investigation it has been found that the allegation of higher base price in e-auction has no merit.
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