CCI Closes Case Against Jindal Stainless Over "Jindal Saathi" Programme, Indonesian Supply Arrangements

The Competition Commission of India on Tuesday closed an information against Jindal Stainless Limited (JSL), holding that there was no prima facie evidence that its procurement arrangements with Indonesian suppliers or its dealer incentive arrangement violated the Competition Act, 2002.

A coram of Chairperson Ravneet Kaur and Members Sweta Kakkad and Deepak Anurag was considering an information filed by an anonymous informant engaged in the downstream production and trade of stainless steel products, alleging anti-competitive conduct by JSL and four entities of Indonesia's Eternal Tsingshan Group.

“the Commission is of the opinion that there exists no prima facie case of contravention of the provisions of the Act and the information filed is directed to be closed under Section 26(2) of the Act.” it held

The informant alleged that, following Indonesia's ban on exports of unprocessed nickel ore in 2020, Indian manufacturers became dependent on imports of stainless steel slabs (SS Slabs) and stainless steel hot rolled coils (SS HRC) from Indonesia. It claimed that JSL entered into exclusive arrangements with the Indonesian entities for the supply of these materials, preventing them from supplying competing Indian manufacturers.

According to the informant, JSL held a dominant position in the market for wide cold-rolled stainless steel (CRSS) products in India, with a market share exceeding 60%. The exclusive supply arrangements were alleged to have denied market access and distorted competition.

The informant also challenged JSL's 'Jindal Saathi' program and the associated Memoranda of Understanding, alleging that they made the dealers procure the maximum possible quantity of materials from JSL, thereby creating a de facto exclusivity arrangement in the downstream market.

JSL denied the allegations, contending that the arrangements were part of a legitimate backward integration joint venture to secure long-term raw material supplies and did not foreclose competition. It also argued that the Jindal Saathi programme was voluntary and imposed no exclusivity obligations.

Examining the allegations, the Commission observed that the informant had failed to produce any evidence showing that competing manufacturers had actually been denied access to SS Slabs or SS HRC by the Indonesian suppliers.

“The allegations are therefore based largely on circumstantial indicators such as import patterns, strategic investments and Indonesia's position in the nickel value chain.” it noted

The Commission further observed that the impugned arrangements had not created barriers to market entry, as manufacturers continued to have access to multiple domestic and international sources of SS Slabs, SS HRC and other key raw materials.

“Further, no material has been placed before the Commission at this stage to demonstrate any adverse impact on consumers resulting from the impugned arrangements. "It noted

The Commission also noted that JSL's Indonesian-sourced billets were supplied to several domestic manufacturers, indicating that nickel-bearing intermediate inputs were available through multiple channels.

Accordingly, it held that the allegation that the arrangements had resulted in denial of market access to competing manufacturers was not substantiated.

The Commission also rejected the challenge to the Jindal Saathi programme, finding that the programme and the associated MoUs did not impose mandatory exclusivity or minimum purchase obligations.

“In the absence of evidence demonstrating customer lock-in, exclusivity, denial of market access, loss of customers, or foreclosure of competing manufacturers, the Commission finds no material to conclude that the impugned arrangements result in an abuse of dominant position under Sections 4(2)(a) or 4(2)(c) of the Act.” it said

Finding no prima facie case of contravention of the Competition Act, the Commission closed the information.