CCI orders probe against REC for anti-competitive ways

The Competition Commission has ordered a probe against state-owned REC for allegedly indulging in unfair business practices with respect to financing of rural electrification schemes.

New Delhi: The Competition Commission has ordered a probe against state-owned REC for allegedly indulging in unfair business practices with respect to financing of rural electrification schemes.

The fair trade watchdog's decision has come following a complaint against REC Power Distribution Company, a wholly-owned subsidiary of Rural Electrification Corp.

The CCI said it appears that REC and its arm tried to use their position in the market for financing of rural electrification schemes to "distort/manipulate competition".

Besides, the Competition Commission of India (CCI) has identified the market for providing consultancy services in power projects as also the relevant market in this matter.

"It seems to have been done to benefit the opposite party (REC Distribution Company)," CCI noted.

Rural Electrification Corporation (REC) which provides financial assistance to public sector power utilities, state electricity boards, private power developers, among others is also the nodal agency for implementation of 'Rajeev Gandhi Grameen Vidyutikaran Yojna (RGGVY) scheme'.

As per a complaint filed with the CCI, it has been alleged that there is a conflict of interest existing between REC Power Distribution Company and its parent company in implementation of RGGVY scheme.

It is said in the complaint that REC Power Distribution allegedly secured business orders from various state distribution utilities on the verbal promise that it would be able to get the approvals from REC as the head of RGGVY scheme also happened to be the CEO of the parent company.

In a recently released order, the Competition Commission of India (CCI) prima facie found that "the conduct of REC and the opposite party appears to be anti-competitive...And the matter deserves to be investigated by the Director General (DG) under...The (Competition) Act".

Among others, the CCI noted that "the act of excluding other power utilities (like Power Grid Corp, NTPC) from the market for providing consultancy services in power projects appears to be violative of...The Act, as the same prima facie amounts to leveraging the dominant position in one relevant market to protect another market," the regulator added.

REC Power Distribution is into developing and investing in electricity distribution and its related activities.

Its main objectives are to promote, develop, construct, own, operate, distribute and maintain 66 KV and below voltage class electric supply lines and provide consultancy in the electrification field for agencies/government in India and abroad.

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