8/9/2019 Prevention of Adverse Effect on Competition Regulation

1/4

PREVENTION OF ADVERSE EFFECT ON COMPETITION

REGULATION, 2012

Objectivity and Scope of these Regulations

Under of Electricity Act 2003 (Section 178 read with Section 60 and 66) provision has

een !ade where "E#" can !a$e re%&lation in order to prevent any adverse effect

co!petition in the electrical ind&stry' revention of Adverse effect on co!petition

#e%&lation 2012 has een for!&lated in accordance to the stated provisions

*hese re%&lations are applicale to all licensees + %eneratin% co!panies' "E#" !ay

iss&e direction to any licensee or %eneratin% co!pany which enters into an a%ree!ent

with any party which can li$ely ca&se an adverse effect on co!pletion in electricity

ind&stry'

Relevant Market

,As per cla&se - !entioned in the re%&lation ,Relevant market means the market

which may be determined by the Central Commission with reference to one or more of

the relevant product market or the relevant geographic market or the relevant

temporal market.

a' #elevant prod&ct !ar$et considered are the verticals related to electricity

&siness i'e' .eneration trans!ission distri&tion tradin%

' /hile deter!inin% #elevant %eo%raphic !ar$et "E#" has to chec$ the factors

li$e re%&latory li!itation national and state policies infrastr&ct&ral facilities

trans!ission capacity constraints and appropriate le%al and re%&latoryfra!ewor$ which allows for access to the !ar$et

c' /hile deter!inin% #elevant te!poral !ar$et "E#" has to chec$ the factors

pea$ de!and for electricity seasonality any other factor other than pea$

de!and or considered relevant y "E#"

Anti-Competitive agreements

n contet with "la&se "o!!ission !ay deter!ine the a%ree!ent has an adverse

effect on co!petition if !entioned factors are seen in the a%ree!ent

a' "reation of arriers to new entrants in the !ar$et' rivin% eistin% co!petitors o&t of the !ar$et

c' 4oreclos&re of co!petition in the !ar$et

d' !pact on lon% ter! plannin%

e' !pact on 5&ality contin&ity and reliaility of s&pply i!prove!ents in %eneration or

distri&tion of electricity or provision of services pro!otion of technical scientific

and econo!ic develop!ent y !eans of %eneration or distri&tion of electricity or

provision of services

f' !pact on !ar$et develop!ent

%' Accr&al of enefits to cons&!ers or %eneratin% co!pany or licensee

h' Ens&rin% safety sec&rity and reliaility of the power syste!

Abuse of Dominant osition

8/9/2019 Prevention of Adverse Effect on Competition Regulation

2/4

n contin&ance with the aove in "la&se 6 provisions have een !ade for "E#" to

iss&e direction to a licensee or %eneratin% co!pany which &ses + a&ses its do!inant

position ca&sin% adverse effects on co!petition'

As defined &nder "la&se 6 of the re%&lations

Dominant position in these regulations means a position of strength, enjoyed by a

licensee or generating company in the relevant market on its own or jointly with other

licensee or generating company, which enables it to!

a" operate independently of competitive forces prevailing in the relevant market

b" affect its competitors or consumers or the relevant market in its favour

n contet with the aove a&se of do!inant position will e in the sit&ation where

licensee or %eneratin% co!pany sin%ly or ointly in any case

a' i!pose discri!inatory conditions in p&rchase or sale of electricity or &se

discri!inatory prices in sale or p&rchase of electricity

' 9i!its or restricts %eneration of electricity provision of services' Also li!its

infor!ation technical or scientific develop!ent relatin% to %eneration of

electricity or provision of services for cons&!ers other licensee or %eneration

co!pany

c' nd&l%es in practices res&ltin% in denial of !ar$et access incl&din% denial to

any infrastr&ct&ral facility'

d' !a$es concl&sion of contracts s&ect to acceptance y other parties of

s&pple!entary oli%ations which y their nat&re or accordin% to co!!ercial&sa%e have no connection with the s&ect of s&ch contracts

e' Uses its do!inant position in one relevant !ar$et to enter into or protect

other relevant !ar$et'

*he "o!!ission !ay consider followin% factors to deter!inin% whether the licensee

is enoyin% do!inant position or not

a' :ar$et Str&ct&re si;e of !ar$et social oli%ations and social costs related to

!ar$et

' :ar$et share si;e and reso&rces level of concentration in the !ar$et of the

licensee or %eneratin% co!pany

c' Si;e and i!portance of the co!petitors (incl&din% their aility to increaseo&tp&t within the relevant ti!e period) s&pply capacity of the co!petitors

d' Econo!ic power of the licensee or %eneratin% co!pany incl&din% co!!ercial

advanta%es over co!petitors dependence of cons&!ers on licensee or

%eneratin% co!pany for s&pply of electricity and services

e' Entry arriers incl&din% arriers s&ch as re%&latory arriers %eo%raphical

arriers financial ris$ hi%h capital cost of entry !ar$etin% entry arriers

technical entry arriers econo!ies of scale

f' #elative advanta%e of licensee or %eneratin% co!pany as in contri&tion to

the econo!ic develop!ent or y way of contri&tion to the sec&rity and

reliaility of the power syste!

8/9/2019 Prevention of Adverse Effect on Competition Regulation

3/4

Anti-Competitive Combinations

n accordance to "la&se 7 of the re%&lation "entral "o!!ission !ay iss&e

appropriate directions to a licensee or %eneratin% co!pany which enters into a

co!ination which is li$ely to ca&se an adverse effect on co!petition in the

electricity ind&stry

Under this cla&se ac5&isition or a!al%a!ation of directly or in directly of !ore than

one co!pany (licensee or %eneratin% co!pany) y any other licensee or %eneration

co!pany shall e considered as co!ination'

4&rther in this contet "E#" has defined ,"ontrollin% the affairs or !ana%e!ent< of

another %eneratin% co!pany+licensee y a co!pany when one co!pany

a' =as votin% ri%hts of 26 > or !ore in a co!pany

' s appointin% 0 > or !ore !e!ers in the oard of directors

Under effect of co!ination the "E#" !ay loo$ in to followin% factors which

wo&ld have or li$ely to have adverse effect on co!petitiona' Entry arriers in the !ar$et potential i!ports !ar$et share of the %eneratin%

co!pany+licensee after co!ination

' 9evel of concentration de%ree of co&ntervailin% power in the !ar$et

c' li$elihood that the co!ination wo&ld res&lt in the parties to the co!ination

ein% ale to si%nificantly and s&stainaly increase tariff or red&ce 5&ality of

s&pply

d' li$elihood that the co!ination wo&ld res&lt in the re!oval of a vi%oro&s and

effective co!petitor or co!petitors in the !ar$et

e' Etent of effective co!petition li$ely to s&stain in a !ar$et or etent to which

alternative so&rces of s&pply are availalef' i!pact on lon% ter! power syste! plannin% 5&ality of s&pply !ar$et

develop!ent

%' nat&re and etent of innovation y licensee possiility of a failin% &siness

d&e to this co!ination

h' relative advanta%e y way of the contri&tion to the econo!ic develop!ent

y any co!ination havin% or li$ely to have adverse effect on co!petition

i' whether the enefits of the co!ination o&twei%h the adverse effect of the

co!ination

!n"uiry into anti-competitive agreements# abuse of dominant position or combination

*he "o!!ission !ay in5&ire into any alle%ed contravention of the provisions

contained in re%&lations 6 or 7 on its own initiative or if it %ets

a' #eceipt of any co!plaint fro! any person

' a reference !ade to it y the "entral .overn!ent or a State .overn!ent or a

stat&tory a&thority

?n receipt of s&ch alle%ation ased on the availale pri!a facie of the case on its

opinion "o!!ission can oth close the !atter and co!!&nicate the !atter to

"entral .overn!ent or direct an#nvestigating officerto investi%ate on the !atter' *he

nvesti%atin% ?fficer will cond&ct an investi%ation and s&!it a report on his findin%s

within period specified y the "entral "o!!ission

8/9/2019 Prevention of Adverse Effect on Competition Regulation

4/4

Directions by Central Commission after in"uiry

After in5&iry if the "o!!ission finds that a licensee or %eneratin% co!pany has

entered into an anti@co!petitive a%ree!ent referred to in re%&lation or has a&sed its

do!inant position referred to in re%&lation 6 then "o!!ission !ay direct s&ch

licensee or %eneratin% co!pany to discontin&e the a%ree!ent or !odify the

a%ree!ent as the case !ay e'

"o!!ission can also i!pose penalty on oth the parties enterin% into s&ch

a%ree!ents

n case of co!ination referred in re%&lation 7 "o!!ission can iss&e directions to

!odify the a%ree!ent in order to ne%ate the adverse effect on co!petition in the

electricity ind&stry

"o!!ission !ay also pass interi! direction to the co!panies to te!porarily restrain

any a%ree!ent fro! carryin% o&t if seen that a%ree!ent can ca&se adverse effect' *he

affected party will e %iven opport&nity to e heard'

o$er to Rela% and o$er to Remove Difficulties

Under these re%&lations "E#" has een %iven power to rela any of the provisions of

these re%&lations on its own !otion or on an application !ade efore it y an

interested person'

f any diffic&lty arises in %ivin% effect to any of the provisions of these re%&lations

"o!!ission has the power to !a$e provisions for the p&rpose re!ovin% diffic&lties

y ta$in% ta$e s&itale action not ein% inconsistent with the provisions of the Act