Neeraj Malhotra vs North Delhi Power Limited And Ors

The informant Shri Neeraj Malhotra, Advocate, New Delhi has filed the instant information against the opposite parties on 27.08.2009 under Section 19(1) alleging violation of Section 3(1), 3(3) (a) and (b) and Section 4(1), 4(2)(a)(i) of the Competition Act 2002.

BACKGROUND

1.1 Since this case relates to various issues relating to supply of electricity to the public/consumers, it is pertinent to briefly outline the scenario existing in electricity sector at the outset.

1.2 The history and evolution of the power sector in India dates back to the 1880s, when a small power generating station with local distribution was established in the hills of Darjeeling in the eastern part of India. The legislations of 1887 and 1903 that provided for private power and minimal regulation, evolved into a more comprehensive Indian Electricity Act 1910, which was the first basic framework for electricity industry. It provided for private electricity licences in specified areas for supply of electricity. In the post independence period, with the objectives of extending electrification and achieving regional economic development, the electricity sector was nationalized in 1948. Under the Electricity (Supply) Act, 1948, State Electricity Boards (SE Bs) were established. The SE Bs were mainly funded by the states and they carried out the objectives of the state policies. The commercial viability of the SE Bs started getting affected in 1970s due to a host of reasons and the Government amended the Electricity Act, 1948 in 1985 to provide for 3% as minimum return. Despite this safeguard, SE Bs over a period of time suffered financially and in terms of their performance. In the year 1991, steps towards comprehensive reforms in the power sector were undertaken.

1.3 In 1990s, India ranked eighth in the world in terms of annual electricity generation. About 75 percent of the country's electricity generation comprised of thermal power plants, followed by hydro (15 percent), and gas (5.5 percent). The level of thermal electricity generation was expected to further in coming years. However, India's per capita electricity generation is one of the lowest in the world. A need for comprehensive reforms was felt and as a result, a new act to govern the power sector in India was enacted in 2003 by the name of Electricity Act, 2003.

1.4 The Electricity Act, 2003 inter-alia mandated that State Electricity Boards (SE Bs) will no longer exist in the existing form and will be restructured into separate generation, transmission and distribution entities. The Act of 2003 also stipulates licensee-free thermal generation, non-discriminatory open access of the transmission system, gradual implementation of open access in the distribution system to pave way for creation of power market in India and encouragement of private sector participation in generation, transmission and distribution with the role of the governments being relegated to advisory in nature. The Act has introduced new concepts like power trading and aims to establish market-based regime in the electricity sector. Establishment of Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) have been formalised. The Ministry of Power has signed MoUs with the states to undertake time bound distribution reforms as a part of reform process. So far 28 states have constituted independent regulatory commissions and 23 SER Cs have issued tariff orders for rationalizing tariffs and open access regulations. In all, 16 Electricity Boards /Electricity Departments have been unbundled and corporatized, and Consumer Grievances Redressal Forums and Ombudsmen have been constituted/appointed in 22 states. The CERC and SER Cs have been given powers to grant inter-state and intra-state trading licences respectively. So far CERC has granted 43 inter-state trading licences. CERC has issued guidelines for setting up power exchange. It has given approval to two power exchanges, viz; the Indian Energy Exchange Ltd. (IEX), New Delhi and Power Exchange India Limited (PXIL), Mumbai. A National Power Exchange is also planned to be made operational. Open access is considered as an important framework seeking to promote competition. The regulations on open access in inter-state transmission together with the regulations on inter state trading are issued by the CERC. The responsibility for the introduction of open access at the distribution level rests with the State Electricity Regulatory Commissions. Open access transactions at interstate transmission have increased from 778 in 2004-05 to 5933 in 2006-07. The number has reached 9560 in 2007-08 and 9347 in 2008-09.

Background of Power Reforms in Delhi

1.5 In 1905, M/s John Fleming Company was granted the licence to supply power to the inhabitants of Delhi. In the year 1951, Delhi State Electricity Board (DSEB), was established replacing a private utility, in pursuance of the policy for the power industry mandated by the Electricity (Supply) Act, 1948, entrusting the sector primarily to the new institution of State Electricity Boards. DSEB was replaced in 1958 by the Delhi Electric Supply Undertaking (DESU) which was created as a wing of the newly established Delhi Municipal Corporation. Till 1997, Delhi Electric Supply Undertaking (DESU) used to control generation, transmission and distribution of electricity in Delhi. DESU was an integrated utility with generation, transmission and distribution functions serving all of Delhi except the NDMC and MES (Cantonment) areas, to which it supplied power in bulk. Delhi Vidyut Board (DVB), the State Electricity Board of Delhi, was founded in 1997 under the Electricity (Supply) Act, 1948 and was the successor of the Delhi Electric Supply Undertaking (DESU). While DESU was a part of the Municipal Corporation in Delhi, DVB was placed under the Delhi Government.

1.6 Delhi Government issued a strategy paper in February 1999 outlining its intention to unbundle DVB, create an independent regulatory entity, and privatize distribution. The assets and liabilities of DVB were first transferred to the Delhi government and then to six successor companies-one generating company (Indraprastha Power Generation Company Limited), one transmission and bulk supply company (Delhi Power Supply Company Limited), three distribution companies and one Holding Company (Delhi Power Company Limited). The three distribution companies were known as Central-East Delhi Electricity Distribution Company Limited, South-West Delhi Electricity Distribution Company Limited and North North-West Delhi Distribution Company Limited. The assets of Pragati Power Projects were transferred to Pragati Power Corporation Limited (PPCL). The entire capital of the successor companies equity and debt) was held by the new Holding Company which was 100 percent owned by the Delhi Government.

1.7 On July 1, 2002, the Government of the National Capital Territory of Delhi [Delhi Government] privatized the distribution portion of Delhi Vidyut Board (DVB), a vertically integrated state owned power enterprise, through the sale of 51% of the equity in three distribution companies. In the process of privatisation of distribution portion of DVB, six entities - AES, BSES, Cescon, China Light & Power, Reliance Power and Tata Power-were pre-qualified but only two entities-BSES and Tata submitted proposals in response to the RFP. The three distribution companies created at the time of privatization were ultimately sold to two privately owned Indian Power Companies, BSES and Tata Power. BSES bought two companies covering the central and east zones and the south and west zones and Tata Power purchased one company covering the north and northwest zones. The three distribution companies were privatized but the three other companies continued to be owned by the Delhi Government. At the time of privatization, as per reports, DVB had about 2.5 million customers with a connected load of about 5600 MW, energy sales of about 8000 Gwh and an annual revenue of about Rs. 3000 crore (US $630 million).

1.8 At present, in the area of generation, Pragati Power Corporation Limited (PPCL) and Indraprastha Power Generation Company Ltd. (IPGCL) are Government Companies within the meaning of Companies Act, 1956 and are wholly owned by the Government of National Capital Territory of Delhi. Further, they are also the generating Companies as defined under Section 2(28) of The Electricity Act, 2003. IPGCL is generating electricity from its three power stations viz (i) Indraprastha (ii) Rajghat and (iii) Gas Turbine Power Station. Pragati Power Corporation Limited (PPCL) is supplying power from its power station at Pragati, Ring Road, I.P. Estate, New Delhi. The power generated from these power stations is being supplied to the transmission Company i.e. Delhi Transco Limited, which is also a Govt. of NCT of Delhi Undertaking. The transmission related functions are being carried out by Delhi Transco Limited (formerly Delhi Power Supply Company Limited), which is supplying electricity for distribution to three DISCOMs - NDPL, BSES Rajdhani, BSES Yamuna together with NDMC and (sic).

1.9 In Delhi, now the SEB has been unbundled; there is one holding Company and one licensee Transmission Company by the name of Delhi Transco Limited, which remains under the control of Govt. of Delhi. The distribution arm of erstwhile Delhi Vidyut Board has been privatised and licences have been granted to three distribution companies -NDPL, BSES Rajdhani Power Limited and BSES Yamuna Power Limited except for the areas under NDMC and Military Engineering Services. These distribution companies are also supplying electricity to the consumers.

1.10 A profile of the three existing distribution companies(opposite parties in this case) is given below:

1.10.1 NDPL - North Delhi Power Limited (NDPL) is a joint venture between Tata Power Company and the Government of NCT of Delhi with the majority stake being held by Tata Power. It distributes electricity in North & North West parts of Delhi and NDPL caters to a population spread over 510 square kms with a consumer base of about 11 lac consumers.

1.10.2 BSES Yamuna Power Limited (BYPL)- BYPL distributes power to an area spread over 200 sq kms with a population density of 4230 per sq km. It has about 15 lakh customers spread over districts across Central and East areas including Chandni Chowk, Daryaganj, Paharganj, Shankar Road, Patel Nagar, G T Road, Kardardooma, Krishna Nagar, Laxmi Nagar, Mayur Vihar, Yamuna Vihar, Nand Nagri and Karawal Nagar.

1.10.3 BSES Rajdhani Power Limited (BRPL)- BRPL distributes power to an area spread over 750 sq. km with a population density of 1360 per sq km. It has over 16 lakh customers spread in districts across South and West areas including Alaknanda, Khanpur, Vasant Kunj, Saket, Nehru Place, Nizamuddin, Sarita Vihar, Hauz Khas, R K Puram, Janakpuri, Najafgargh, Nangloi, Mundka, Punjabi Bagh, Tagore Garden, Vikas Puri, Palam and Dwarka.

1.11 In March 1999, Delhi Electricity Regulatory Commission (DERC) was established. The Commission was initially created under an Act of the Parliament and then after notified under the State Reform Act. As per Section 76 and Section 82 of the Electricity Act, 2003, Central Electricity Regulatory Commission, established under Section 3 of the Electricity Regulatory Commissions Act, 1998 shall be deemed to be the Central Commission and State Electricity Regulatory Commissions, established under Section 17 of the Electricity Regulatory Commissions Act, 1998 shall be deemed to be the State Regulatory Commissions.

1.12 The mandate of DERC, inter alia, is to determine the tariff for electricity, wholesale/bulk, grid or retail, as the case maybe; to determine the tariff payable for the use of the transmission facilities; to regulate power purchase and procurement process of the licensees and transmission utilities including the price at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the National Capital Territory of Delhi; to aid and advise the Government in matters concerning electricity generation, transmission, distribution and supply in the "National Capital Territory of Delhi; to regulate the operation of the power system within the National Capital Territory of Delhi; to set standards for the electricity industry in the National Capital Territory of Delhi including standards related to quality, continuity and reliability of service; to aid and advise the Government in the formulation of its power policy; to issue licences for transmission, bulk supply, distribution or supply of electricity and determine the conditions to be included in the licences; to aid and advise the Government on any other matter referred to the Commission by the Government etc.

Competition at Retail Supply Level

1.13 Consumers in India pay one of the highest prices for energy in Purchasing Power Parity (PPP) terms, in comparison with countries like US, Japan or China. Several countries including India, are introducing competition into theircity markets with a view to lowering the cost of power and enhancing choice of the consumers.

1.14 Looking into the evolution of electricity sector reform throughout the world, each reform process is characterized by at least one or a combination of the following characteristics: independent power production, competition in generation and/or distribution, decentralization, privatization, and unbundling of generation, transmission and distribution.

1.15 Reform experience in diverse jurisdictions highlights a converging trend towards introducing consumer choice of electricity supplier as fundamental pillar of effective reform. This means stimulating competition not only in generation, but also in electricity supply. Introducing competition in end user supply requires unbundling it from distribution, creating a critical mass of suppliers to enable genuine choice, and development of an appropriate technical framework related to metering and billing.

1.16 There exists at least three various competition models that represent an evolution over the vertically integrated monopolistic structure ; i) whole sale competition model - in which while the generation activity is competitive, transmission and distribution functions are regulated with generating companies competing to sell to distribution companies; ii) retail competition model, in which all customers have access to competing generators either directly or through their choice of retailer and iii) portfolio manager model or Generation Procurement Competition Model, in which the building and operation of generation facilities is competitive, often through an auction. For all other activities, there is regulation and the monopoly utilities continue to supply electricity to end-users within their franchise area. The basic emerging alternative to the vertically integrated monopoly is the retail competition model. The retail competition model has been as containing the following characteristics:

1.17.1 Transactions between generators, end users and a number of possible intermediaries, including retailers, power exchanges and brokers, take place freely with in the constraints imposed by the network). Thus, on the demand side, end users are free to choose their supplier; on the supply side, generators can sell their electricity to any other market players.

1.17.2 Network activities and prices are regulated and, in particular, there are provisions to ensure non-discriminatory third party access to the network, often including some form of separation of network activities from generation and end-user supply.

1.17.3 There is an independent system operator, which means that the system operator is not owned or, at least, not controlled by the owners of generation assets.

1.18 A major challenge in the process of reforms is removal of barriers to entry: competition requires a sufficient number of competitors. If supply is only with a few firms, competition generally fails to develop and prices may remain persistently above their competitive levels. An adequate market structure in all parts of the supply chain has been considered as essential to develop workable competition.

In this backdrop the present matter involving three DISCOMs operating in Delhi is being disposed of by this order.

Factual matrix of the matter as disclosed in the information is as under:

2.1 The informant has filed an information with the Commission on the matter of electricity supply meters fixed mandatorily by the Distribution Companies in Delhi (North Delhi Power Co. (NDPL); ii) BSES Rajdhani power Ltd; iii) BSES Yamuna Power Ltd.) interchangeably referred to as Licensees, DISCOMs which are running fast and inflating the consumers electricity supply and services charges. Consumers are not allowed to buy their own meters.

2.2 It has been submitted by the informant that as per report published by 'The Hindu' on 14.04.2005, in terms of a meter testing drive undertaken by the enterprises engaged in supply and distribution of electricity to the their consumers within the territory of Delhi in July-August 2004, only around 93% of the meters checked were found to be working within the specified limit according to statistics given by the Delhi Electricity Regulatory Commission (DERC). Another news item appearing in 'Hindustan Times' dated 08.04.2008 a committee named as Electricity Consumer Advocates Committee had noted that most meters tested by Central Power Research Institute of Bangalore under the aegis of Public Grievance Cell, were found to be running fast. Similarly news report appearing in 'The Hindu' on 09.04.2008 had brought forth the fact that the Power Consumer Advocates Committee constituted by the Delhi Government in December, 2007 had also found that the meters sent for testing to the Central Power Research Institute of Bangalore were not conforming to the prescribed standards. The said report further mentioned that the meters installed by the enterprises engaged in supply and distribution of electricity to their consumers within the territory of Delhi were giving readings up to 2.5% faster as against the 0.50% margin allowed, in terms of the queries put up by committee headed by retired Delhi High Court Judge Hon'ble Shri R.C. Chopra. That in another report/survey carried out by 'Times of India' on 23.03.2009, it was reported that a Delhi Government Inspection Report had admitted and concluded that almost 90% of the electricity meters which were checked in the National Capital Territory of Delhi were running 2.5% higher than the error margin limit and were thus leading to overcharging of the consumers. The Hindustan Times vide its report published on 09.06.2008 had reported the fact that the High Court in its judgment had reported that digital electricity meters with a error margin of more than 1% should be considered as faulty.

2.3 As per averments, the DISCOMs purchase and install the meters on their own and the consumers are not allowed to procure and buy the meters of BIS Standard manufactured by any of the manufacturer for installing the same. Allegedly almost 82% of the meters installed by the above enterprises are found to be running on the plus side of 2.5% of the prescribed limit and hardly any meter is running on the slower side i.e. the minus side of 2.5%.

2.4 The informant has alleged that DISCOMs are abusing their dominant position by imposing unfair and discriminatory conditions in purchase of goods (i.e. electricity meters) and also services, thereby leading to foreclosure of competition by hindering entry into the market.

2.5 It has been also alleged that the practice carried on and the decision taken by all these companies engaged in supply and distribution of electricity jointly and severally, has the effect of determining the prices of the services being supplied by them and being purchased by its consumers in as much as they are overcharging the prices more than what is actually due to them and thus their practice and decision has the effect of indirectly determining the sale prices of the services rendered by them. In addition to above, the arrangement, understanding and concerted action on part of the enterprises to supply and install the electricity meters themselves thereby prohibiting their consumer from purchasing and installing meters, also limits and controls the production and supply of goods (electronic meters) and provision of services in the market thereby having an appreciable adverse effect on competition within India. The same has the effect of driving existing competitors who are manufacturing and selling electronic meters out of the market and foreclosing the competition by hindering their entry into the market. The same also has the effect of creation of barriers to new entrants, manufacturing electronic meters in the market.

2.6 In short the informant has alleged that DISCOMs are abusing their 'dominant position' in the supply of electricity in their area of supply resulting in:

i. Foreclosure of competition in the market for meters by way of:

a) Limiting the number of meter manufacturers in their area of supply;

b) Existing meter manufacturers exiting from the market

c) Creation of entry barrier to new entrants

ii. Indulge in cartel like behaviour

iii. Impose discriminatory and unfair pricing mechanism:

a) Use a software which results in inflated bills - now under the review of DERC

b) Earn additional revenue from sale of unused power as a consequence of (b)

c) Billing cycle of 56 days instead of 60 days leading to further additional unaccounted revenue

d) Prohibit consumer choice in the purchase of meters from outside

2.7 The informant has alleged violation of Section 4(1) and Section 4(2) (a) (i) namely 'Abuse of Dominance' whereby the DISCOMs are directly or indirectly imposing unfair or discriminatory conditions in purchase or sale of goods or services. The DISCOMs have also been allegedly violating Section 3(1), 3(2), 3(3) (a) and (b) by entering into anti-competitive agreement or carrying on practices which are likely to cause appreciable adverse effect on competition.

The informant has prayed for the following reliefs:

3.1 (a) The enquiry be made by Commission, into above mentioned contravention of the provisions contained in Section 3(1), (2), & (3) (a) & (b) read with Section 4(1), 4(2) (a) (i) of the Competition Act, 2002;

(b) The DISCOMs be directed to discontinue and not to re-enter the above agreements and to discontinue the practice and the decisions taken by them leading to indirect determination of the sale prices of the services rendered by them

(c) The DISCOMs be directed to discontinue the abuse of their dominant positions, which imposes unfair and discriminatory conditions in purchase of goods and services their consumers.

(d) The DISCOMs be further penalised for the above violations to the extent of 10% of their average turnover for the last three preceding financial year;

(e) The Commission should pass further orders which it deems fit and proper in the facts and circumstances of the present case.

3.2 The Informant has also prayed to the commission to grant an ex-parte ad-interim order Under Section 33 of the Act for restraining the above enterprises /persons from insisting and compelling its new/proposed consumers to install the electricity meters being sold and supplied by the above enterprises /persons, thereby allowing its new /proposed consumers to buy and install the electricity meters of BIS mark of their choice from any of the manufacturers of electricity meters.

The informant has filed following documents in support of contentions raised by it in the information:

(i) News item published in website of The Hindu on 09-04-2008.

(ii) News item published in website of The Times of India on 23.03.2009

The Commission after considering the nature of issues involved in this matter, decided to seek the views of the Delhi Electricity Regulatory Commission (DERC) being a sectoral regulator. The DERC in its response has stated that Competition Commission of India was the appropriate authority to examine the matters pertaining to 'Abuse of Dominance', whereas matters of tariffs and tariffs related issues would be looked into by the DERC.

After considering the information and all the relevant material available on record, the Commission formed an opinion under Section 26(1) of the Act that there exists a prima facie case and accordingly referred the matter to the Director General for investigation vide its order dated 26.11.2009, also indicating certain other points to be examined in addition to the allegations contained in the information.

Findings of DG

7.1 The Director General after receiving the direction from the Commission got the matter investigated and submitted his report to the Commission on 19.02.2010.

7.2 The DG in order to examine the issues relating to this case, has gathered the facts from both primary and secondary sources. Evidence was also collected by sending questionnaire to concerned parties. A survey was also got conducted through an independent agency in order to elucidate the correct position faced by the consumers of these DISCOMs. Responses from committees/bodies like Electric consumers advocate committee, public grievance cell, Govt. Of Delhi, Bureau of Indian Standard (BIS) and Central Power Research Institute (CPRI) were also obtained. During the course of investigation statements of manufacturers of Electric Meter were also recorded. All these information gathered were confronted with the DISCOMs to explain their position.

7.3 DG after examining the alleged infringement of provisions of Section 3 of the Act has concluded that the informant has alleged contravention of the provisions of Section 3(1), 3(2) and 3(3) (a), (b) of the Act, but no evidence of any agreement or action in concert has been furnished, to establish that the DISCOMs, based upon their understanding or through an agreement and independent of any regulatory mechanism, have indulged in the acts prescribed in these sections. From the investigation conducted also, no evidence could be found to establish contravention of the provisions of Section 3(1) and 3(3) of the Act. Based upon available evidence on record, contraventions of Section 3(1) read with Section 3(3) remain unsubstantiated.

7.4 In order to examine the allegation of abuse of dominance the DG has defined elaborately the relevant market in this case. He has discussed this issue in detail and analysed that within the electricity sector, following four segments have traditionally been identified as constituting different product markets:

i) generation and wholesale, the production of electricity in power stations;

ii) transmission, the transport of electricity over high tension networks;

iii) distribution, the transport of electricity over the low tension network and

iv) supply, the sale of electricity to the final consumers.

7.5 The DG has observed in his report that at the present state of affairs, in Delhi, the last of the two markets are not really distinct as the same entity is engaged in both the jobs. Therefore, the relevant market in the instant case would mean relevant product market comprising of distribution and supply of electricity and allied facilities like metering and reading of meters, billing etc. and relevant geographic market comprising of the areas of operations of the three companies-BRPL, BYPL and NDPL determined subsequent to privatization of DVB. Electricity remains a specialised product of its own class, having its own unique physical characteristics. There is no alternative available to the consumers, other than to get electricity from the three DISCOMs of Delhi under the prevalent conditions.

7.6 The DG has further analysed that within the areas of operations of the three DISCOMs, co-terminus with the market of distribution and supply of electricity, a separate market also exists for meters which measure consumption of electricity.

7.7 The DG has concluded that in view of above it is clear that the unique physical characteristics and end-use of goods, existence of specialised products and specification requirements in terms of regulations and standards fixed by CEA, DERC and BIS, conditions for supply of goods or provision of services in the areas of operations under the three DISCOMs which are distinctly homogeneous and are distinguishable from the conditions prevailing in the neighbouring areas clearly determine the Relevant Market in terms of market of distribution and supply of electricity, metering and billing facilities in the areas of operations of the three DISCOMs, as has been discussed above, in terms of conditions set out in 19(6) and 19(7).

7.8 The DG has stated that it is clearly established that these DISCOMs are enjoying dominant position in the relevant market. It has been concluded that each one of the three companies has the ability to behave/act independently of the competitive forces prevailing in the relevant market since they have been given specific and exclusive areas for distribution and supply of electricity. As on date, BSES Rajdhani, BSES Yamuna and NDPL enjoy position of monopoly in their respective areas of operation. The distribution and supply functions are not segregated because of the prevalent state of licensing conditions. In the market of meters also, these DISCOMs are engaged in installation of meters on their own or in a miniscule portion through their approved manufacturers/vendors. No other vendor can enter this market. In providing services of billing as well, the DISCOMs are having monopoly status since no other market player can provide these services to the consumers. Thus, it may be said that as per the provisions of explanation (a) to Section 4(2), the three DISCOMs are enjoying dominant position in their respective areas of operations.

7.9 In the report all the factors mentioned in Section 19(4) have been analysed in detail before determining the dominant position of DISCOMs. After examining all the factors mentioned above DG has conclusively established the dominance of the three enterprises in the relevant market of distribution and supply of electricity, meters and providing services of billing in their respective areas of operations.

7.10 The DG has further investigated into the acts listed in Section 4(2) to find out whether these dominant players are engaged in such practices which can be termed as abusive in accordance with the provisions of the Act. DG has concluded that three DISCOMs - NDPL, BSES Rajdhani Power Limited and BSES Yamuna Power Limited, have violated the provisions of Section 4(2)(c) which stipulate that there shall be an abuse of dominant position, if an enterprise indulges in practice or practices which result in denial of market access in any manner and also the provisions of Section 4(2)(b)(i) of the Act, which stipulate that there shall be abuse of dominant position if any enterprise limits or restricts market of goods. Further, the actions of DISCOMs also are in contravention of provision of Section 4(2) (a)(i), which state that there shall be abuse of dominant position if directly or indirectly, unfair or discriminatory conditions in purchase or sale of goods or service are imposed, because the consumers under prevalent conditions can get electricity for their consumption, only if they install the meters supplied by the DISCOMs or by their limited number of approved manufacturers/vendors. There is no choice to get consumption of electricity recorded through meters supplied by any other manufacturer/supplier.

7.11 When BIS has awarded licences to as many as 82 manufacturers all over India including some foreign firms and 10 manufacturers in Delhi (81 and 16 respectively as per list posted on the website of BIS till a month ago) to manufacture electronic meters under IS 13779:1999 and these licensees have their own network of dealers, then there was no point in restricting the supply of meters either to the stores of the DISCOMs or to their approved manufacturers/vendors (although in the latter case the procurement has been negligible and almost entire meters are being supplied by DISCOMs themselves). The DISCOMs could have specified and accordingly informed the consumers that they were free to procure meters as per specifications approved by BIS and DERC read with regulations of CEA and in case some additional features like those of anti-tampering were required, those also could have been mentioned. This would have allowed all those suppliers/manufacturers, who have got BIS licence to manufacture consumer meters under IS 13779:1999, to enter the meter market of Delhi. At present, due to the acts of DISCOMs, the entry in market of meters is severely restricted.

7.12 As per the DG Report it is also shown that DISCOMs have not made much effort to educate the consumers properly. They do not give freedom to the consumers to choose meters of their own choice from any other supplier.

7.13 The DG has also reported that from the information gathered during investigation it was revealed that not just 82% but more than 92% of the meters are running on the positive side. Some are running on positive side beyond 2.5% also. The DG has also commented that these DISCOMs are earning additional revenue running into millions of rupees from such methods and by adopting wrong billing cycles.

7.14 The DG has concluded that the investigation clearly showed that the competition in the relevant market of meters has been restricted in the areas of operations of DISCOMs of Delhi. The DISCOMs have denied entry in the market of meters, have used unfair means in the supply of electricity to consumers and in turn the consumers have been charged excessively. The choice of meters should not have been restricted to the meters supplied by DISCOMs or by their approved manufacturers/vendors. Instead, the DISCOMs could have put on their website the specifications of meters which are required to be procured by consumers along with names and addresses of all BIS Licensees so that consumers may make an informed choice. Further the fact that the DISCOMs are supplying electricity to the consumers through meters, which are not correct, tantamount to imposing unfair conditions in sale of electricity and consequently abuse of their position of dominance in terms of provisions of Section 4(2)(a)(i) of the Competition Act, 2002.

The Commission after examining the report of DG and the entire material available on record in its meeting held on 04.03.2010 decided that the copies of DG report be sent to the concerned DISCOMs for offering their comments/objections. The Commission also decided to grant permission for inspection of records to the concerned parties and afforded opportunity of hearing as per the relevant regulations framed under the Act.

In response to the notice, preliminary reply/objection was filed by the DISCOMs on 23.04.2010. M/s J. Sagar Associates appeared on behalf of the DISCOMs from time to time. Shri Vivek Singhla of NDPL, Shri Raj Arora of BRPL and Shri Pankaj Dingra of BYPL alongwith their officers and Shri Amit Kapur and Mr. Mansoor Ali Shokat, Advocates appeared before the Commission to make oral submissions. Another detailed submission was filed on 29.06.2010. The main points of the replies of the DISCOMs are summarized below.

Reply of Opposite Parties

Though separate submissions have been made by all the three DISCOMs, the contentions are common and identical in their replies. Therefore to avoid repetition brief of submissions made by them is narrated hereunder:

10.1 Preliminary replies submitted on 23-04-2010

i) The DISCOMs have challenged jurisdiction of the Commission to deal with the issues involved in this case. It has been submitted that DERC is empowered and has jurisdiction to deal with the issues relating to anti-competitive behaviour of the distribution companies under the Electricity Act, a special Act.

ii) It has been further submitted that the order dated 26.11.2009 issued by the Commission directing the DG to conduct the investigation was passed without any basis. The conclusion regarding existence of a prima facie case is unsustainable and bad in law and on facts.

iii) The Commission does not have jurisdiction to delve into matter pertaining to electrical meters and specifications thereof in view of the elaborate and exhaustive provisions carved out under the Electricity Act 2003 and rules and regulations made thereunder.

iv) The report submitted by DG deserves to be rejected as the DG has wrongly defined the "relevant product market' as distribution and supply of electricity and allied facilities like metering and reading of meters, billing etc. The relevant product market in case of distribution companies is "supply of electricity" and not the meters and as such the report and the conclusion that distribution companies are abusing their dominant position has to be rejected.

v) It has been submitted that the distribution companies cannot be dominant of market in the meters. The meters are manufactured by meter manufacturers and not by the distribution companies. There is no concept of indirect dominance in law.

vi) Extraneous factors like billing, fastness of meters, billing cycle cannot be taken into account by the DG as the same do not figure under the provisions of Competition Act. It cannot be imported for determination of the relevant market. These are consumer disputes and there are provisions as well as appropriate authorities under the Electricity Act to deal with such issues.

vii) The distribution companies select the supplier of the meters through international competitive bidding. Only those bidders who meet the technical and financial parameters are selected hence this cannot be said that there is any foreclosure of competition.

viii) If any consumer elects to purchase a meter it has to be procured only from approved manufacturer because of technical specifications and compatibility to the distribution network of the company. The list displays by the companies is only indicative and consumer is free to buy meters from other manufacturers provided they meet the aforesaid criteria.

ix) As an awareness programme distribution companies have distributed lakhs of pamphlets and have advertised in the newspapers that consumers can choose their own meters. However, distribution companies do test and calibrate meters procured by consumers in accordance with the CEA and DERC regulations in order to ensure that it is fully compatible with its network. However the seal of manufacturers remains intact even after the testing. The DG has not appreciated that BIS standard is a benchmark and the maximum permissible error margin in the case of class 2.0 meters is (+)/(-)3% and in case of class 1.0 meters it is (+)/(-) 2.5%.

x) Additionally in the reply of BSES Rajdhani it was also emphasized that CPRI, which is Central Government accredited laboratory whose alleged test report has been relied upon by the DG during investigation, has in fact tested more than 6 lakhs meters of BSES and found them fit for installation.

10.2 Replies dated 29.06.2010

i) In their subsequent replies the opposite parties reiterated their submissions and have stated that the order dated 26.11.2009 issued by the Commission directing the DG to conduct investigation did not satisfy the mandatory conditions as it is not a speaking order reflecting any satisfaction of the Commission that there exists a prima facie case.

ii) The Competition Appellate Tribunal is already seized of the issue of fast meters and notice of enquiries have been issued to DISCOMs in the matter (CW No. 33 of 2009 under MRTP Act 1969). It is submitted that since the superior authority is looking this issue as an unfair trade practice such conduct cannot be treated as an abuse of dominant position by the subordinate authority (this Commission).

iii) The DG has misdirected the investigation which appears to proceed to examine issues like alleged fastness of the meters, billing process adopted by the DISCOMs which are not relevant for the purpose of competition issues and are no longer res Integra in view of the judgment of High Court of Delhi in Suresh Jindal v. BSES, RPL and in the case of BRPL v. V.K. Jain.

iv) There was no evidence before the Commission that was provided to it on or subsequent to the date of filing the information which could conceivably constitute material to come to the conclusion of prima facie case. The only basis for order dated 26.11.2006 appears to be 2 newspaper reports filed originally by informant.

v) The opposite parties while challenging the legality, validity and propriety of the consequent actions including the investigations and the present proceedings submitted that the Commission decision is predicated upon a misconstrued or wrong application of findings. The DG has concluded that the relevant market is the supply of electricity through electronic meters whereas the Secretary of Commission in its notice dated 08.03.2010 has observed that "on the basis of the report the DG has concluded that all the above mentioned 3 DISCOMs which are enjoying position of dominance in the relevant market of meters have because of their conduct and practices restricted the competition in the relevant market". It is submitted that given such inherent contradiction at the stage of proceedings the answering Respondent cannot be called upon to answer in absence of specific and definite charges. A charge which may result in punitive action must be set out in clear (sic) and be related to specific provisions of the law, particularly where there is an exhaustive list of abuses of dominance under the Act.

vi) Even if it were to be presumed that relevant market is the market of meters there cannot be a charge of abuse of dominant position since the DISCOMs do not manufacture the meters. Further there are 82 meter manufacturers in the country and there are large number of distribution companies who purchase meters from these manufacturers. Thus there cannot be any violation of Section 4 of the Act.

vii) The DG has given the finding that the DISCOMs have abused their dominance position because more than 90% Meters were running on the positive side. This finding is based on a survey conducted by CPRI but that report has not been supplied to the DISCOMs so no reliance can be placed on that report. Even the report of CPRI relied upon by the DG is defective and is not based on any survey and sample size is too small to be said to be representative of all the consumers in Delhi. Further, even the Ministry of Power in its report had accepted that the sample size was too small as well as biased. It has also been stated that as per IS: 15707 of 2006 a meter showing + / - 2.5 % error is correct meter.

viii) DISCOMs prayed to close the proceedings and drop the allegation against the Respondents or in the alternative pass a reasoned order returning a finding dealing with all the submissions and issue a cleat-description of the relevant market in terms of Section 19 of the Act and violation of Section 4 after allowing sufficient opportunity.

ISSUES

On the basis of the contentions, raised by the rival parties the following issues, relevant for deciding the matter, emerge for determination:

(i) Whether the Commission has jurisdiction to look into the matter or there is any overlap of jurisdiction with the sectoral regulator (DERC)?

(ii) Whether the DISCOMs have entered into any agreement or carrying on any practice which indirectly determines the sale price of electricity and limits or controls the production and supply of electronic meters in violation of Section 3(1) read with 3(3)(a) and (b) of the Act ?

(iii) What is the relevant market in this case?

(iv) Whether the opposite parties are in dominant position in the relevant market?

(v) (sic) the opposite parties are abusing their dominant position in terms of the provisions of Section 4 of the Competition Act, 2002 ?

Determination of issue No. 1

12.1 As already narrated supra in para 5 of this order that on receipt of the information the matter was referred to the Delhi Electricity Regulatory Commission (DERC) for its comments on the allegations levelled in the information. The DERC vide its letter dated 30-09-2009 has categorically opined that "matters relating to electricity tariff have to be decided as per the provisions of Electricity Act, 2003 and DERC Regulations. Accordingly CCI may not be appropriate forum to deal with such issue. However specific issues alluded to by the Petitioner accusing the DISCOMs of abuse of their dominant position may be looked into by the CCI in terms of Competition Act 2002 ".

12.2 Thus it is amply clear that there is no overlap between DERC and CCI in terms of the jurisdiction in this case. The CCI has accordingly proceeded in this case to deal with the issues relating to competition.

12.3 The mandate of Commission is to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. Sectoral regulators have necessary technical expertise to determine access, maintain standard, ensure safety and determine tariff. They set rule of game i.e. entry conditions, technical details, tariff, safety standards and have direct control on prices, quantity and quality. Thus sectoral regulators focus on the dynamics of specific sectors, whereas the CCI has a holistic approach and focuses on functioning of the markets through increasing efficiency through competition. In fact their roles are complementary and to each other and share the objective of obtaining maximum benefit for the consumers.

12.4 In view of the above it is clear that the CCI has all the powers to examine the issues relating to abuse of dominance by the DISCOMs. The preliminary objection raised by opposite parties relating to the jurisdiction of the CCI to deal in this matter is accordingly disposed of.

Determination of Issue No. 2

13.1 The informant has alleged that as the meters installed by the DISCOMs are running fast, the consumers are being over charged in pursuance of the concerted action, practice carried on and decision taken by DISCOMs which has the effect of indirectly determining the sale price of electricity. Additionally the arrangement, understanding and concerted action on part of DISCOMs to supply and install the electricity meters themselves and thereby prohibiting the consumers from purchasing and installing their own meters, also limits and controls the production and supply of electronic meters. It has been alleged that DISCOMs are violating the provisions of Section 3(1) read with Section 3(3) (a) and (b) of the Act.

13.2 After examining the allegations of informant in context of contentions made by DISCOMs before DG with regard to infringement of Section 3 of the Act, DG has come to the conclusion that neither any evidence of any agreement or action in concert was furnished by the informant nor any evidence could be found during the course of investigation to establish the contravention of Section 3 of the Act. DG has observed that based upon available evidence on record, contravention of Section 3(1) read with Section 3(3) remained unsubstantiated.

13.3 On perusal of the record it is apparent that informant has not furnished any material to substantiate the allegation that the alleged conduct of DISCOMs is emanating from any agreement or concerted practice. DG has also not found any evidence which could lend support to the allegations made by the informant. There is not an iota of evidence on record to show any concerted action on part of DISCOMs. Making bare assertions, shorn of any evidence, is not sufficient to establish the contravention. In the absence of any evidence to the contrary there is no reason to disagree with the Conclusion drawn by the DG. Therefore, issue No. 2 is answered in negative.

Determination of Issue No. 3

14.1 Since in the instant case, the issue under examination is abuse of dominant position by DISCOMs, it is necessary to first determine the relevant market for the purposes of the analysis.

14.2 The DG in his report has defined the 'relevant market' as distribution & supply of electricity and allied facilities like metering and reading of meters, billing etc. in respective areas of operations of three DISCOMs of Delhi. Thus, three markets had been identified in the DG's report and it has been stated that it is in line with the EU demarcation of the electricity market. First, there is market for distribution and supply of electricity. Co-terminus with the market of distribution and supply of electricity, a separate market exists for meters and for billing of electricity. Both these markets relate to electricity where the meter market is with regard to meters that measure consumption of electricity and billing market is with regard to the process adopted for reading the meters and billing the consumers.

14.3 On the other hand the DISCOMs have contended that the relevant market should be taken as supply of electricity to consumers in the licensed area of supply in Delhi. The following reasons have been given to support their contentions:

14.3.1 The DISCOMs have been granted license by DERC for distribution and retail supply of electricity in their respective area of supply. Therefore, in terms of license the relevant product market is well defined being supply of electricity to consumers.

14.3.2 The supply of electricity and electricity meters are not interchangeable and hence cannot be taken to be same relevant product.

14.3.3 Electricity is supplied through a composite system of apparatus of which the electricity meter is last amongst them. There are host of other accessories like cables, circuit breakers, fuse, switch and usually a box to hold all these articles and for each of these technical specifications are prescribed. The DISCOMs are neither manufacturing meters nor any of accessories items and in fact they are only ensuring that the quality products at best available prices are made available to the consumers.

COMMISSION'S VIEW

14.4 Relevant market - As the DG and the DISCOMs have defined the relevant market in this case differently, therefore before examining the issue relating to the definition of relevant market it is pertinent to reproduce the relevant provisions of Competition Act 2002.

14.4.1 Section 19(5) "For determining whether a market constitutes a "relevant market" for the purposes of this Act, the Commission shall have due regard to the "relevant geographic market" and "relevant product market".

14.4.2 Section 2(r) defines "relevant market" as the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets;

14.4.3 In Section 2 (s) "relevant geographic market" has been defined as a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas;

14.4.4 Section 2 (t) defines "relevant product market" as a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or service their prices intended use;

14.4.5 While determining the Relevant Geographic Market and Relevant Product Market factors mentioned in Section 19(6) and 19(7) are to be looked into respectively. This will form the basis of determination of the Relevant Market in terms of Section 19(5) of the Act. The determination of relevant market is the first step in assessing dominance in a market or industry.

14.4.6 Section 19(6) stipulates that the Commission shall, while determining the "relevant geographic market", have due regard to all or any of the following factors, namely:

(a) regulatory trade barriers;

(b) local specification requirements;

(c) national procurement policies;

(d) adequate distribution facilities;

(e) transport costs;

(f) language;

(g) consumer preferences;

(h) need for secure or regular supplies or rapid after-sales services.

14.4.7 Further as per provisions of Section 19(7) the Commission shall, while determining the "relevant product market", have due regard to all or any of the following factors, namely:

(a) physical characteristics or end-use of goods;

(b) price of goods or service;

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products.

14.5 Electricity is a non-storable product and in terms of characteristics and intended use does not have any substitute. Electricity remains a specialised product of its own class, having its own unique physical characteristics. There is no alternative available to the consumers, other than to get electricity from the three DISCOMs of Delhi under the prevalent conditions. In India the electricity sector, in general, comprises of following different product markets:

i) generation of electricity in power stations;

ii) transmission, of electricity over high tension networks;

iii) distribution and supply of electricity to the final consumers.

14.6 Under the Electricity Act, 2003 the Government of Delhi issued licenses for the distribution and supply of electricity to three private companies and to two deemed licensees. The three licensees are BSES Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYPL) and North Delhi Power Limited (NDPL). These companies are engaged in the distribution and supply of electricity to the end consumers in the territory of Delhi.

14.7 These Licenses provide for supply of electricity by the DISCOMs to the consumers in their licensed areas. DERC has not issued any parallel licenses in any of the three areas. Further, DERC has permitted open access in keeping with the provisions of the Electricity Act only for consumers of 1 MW and above only. Presently, the open access for consumers of less than 1 MW has not been introduced and therefore, consumers' choice in the case of electricity supply source has not been initiated.

14.8 In the areas of operations of the three DISCOMs, conditions for supply of goods or provision of services are distinctly homogeneous and can be distinguished from the conditions prevailing in the adjoining areas. In the absence of parallel licenses no other company can operate in the areas of operation of these DISCOMs. In words there are no other suppliers in the areas of operations of these DISCOMs and there is no viable alternative product which can serve as substitute to electricity.

14.9 Therefore, the appropriate relevant market in the instant case would be relevant product market comprising of distribution and supply of electricity and relevant geographic market comprising of the areas of operations of the three licensee companies-BRPL, BYPL and NDPL as assigned in their respective licenses.

14.10 In the present sets of facts and circumstances the Commission does not consider that meters conforming to BIS standards or billing services constitute separate markets.

14.11 In the light of foregoing discussions the relevant market in the present case is defined as distribution & supply of electricity in the licensed areas of respective DISCOMs in Delhi. Issue No. 3 is disposed off accordingly.

Determination of Issue No. 4

15.1 Once the relevant market has been defined as above the next step is to assess the dominance of the DISCOMs in the relevant market. As per the provisions of explanation (a) to Section 4(2) of the Act, dominant position means "a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour."

15.2 The three DISCOMs, NDPL, BRPL, BYPL have been assigned specific areas of NCT (Delhi) for distribution and supply of electricity. As per the prevailing licensing conditions and given the present stage of regulatory reforms, the retail supply, of electricity is restricted to the DISCOMs and in the present case the DISCOMs the only licensees for distribution of electricity in their respective areas with open access option available only to consumer of 1 MW and above. Therefore, DISCOMs are the only source of electricity available to the consumers in any particular licensed area for supply of electricity. In such a scenario, there are no perceivable competitive constraints faced by the DISCOMs within the relevant geographic markets of their respective licensed distribution areas. The opposite parties have also not disputed their dominant position in the relevant market of "distribution and retail supply of electricity". The necessary corollary to this is that each one of the three DISCOMs has the ability to behave independently of the competitive forces prevailing in the relevant market since they have been given exclusive areas for distribution and supply of electricity. This leads to the irresistible conclusion that the three DISCOMs enjoy position of dominance in their respective areas of operation to the relevant market of supply of electricity to the consumers.

15.3 The Issue No. 4 is answered in affirmative.

Determination of Issue No. 5

16.1 Holding of a dominant position in relevant market in itself does not fall foul of the Competition Act. It is not the dominance, but its abuse, which is prohibited in law.

16.2 Once the dominance of the DISCOMs in the relevant market of electricity supply has been found to be established, it is now to be examined whether by their conduct they have abused their dominant position or not. The Commission has considered all relevant facts and materials brought out by the DG's investigation as well as the submissions made by DISCOMs in the present matter.

16.3 Since the Commission has identified the relevant market as supply of electricity to the consumers in the respective licensed areas of DISCOMs in Delhi the only pertinent abuse this relevant market, which has been alleged by the informant and found established by the DG, is overcharging the consumers due to fast running of meters.

16.4 In order to examine the above abuse the provisions of Section 4(2)(a)(i) and (ii) of the Act are to be kept in mind, which state that "there shall be an abuse of dominant position if a dominant enterprise or group directly or indirectly imposes unfair or discriminatory (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods and services."

16.5 The unfair condition in the instant matter relates to overcharging the consumers due to fast running of meters.

16.6 While finding the DISCOMs indulging into this kind of abuse the DG has based his conclusion on the data of test results of meters conducted by Central Power Research Institute (CPRI), Bangalore, under the aegis of Public Grievance Cell constituted by Government of NCT of Delhi. This data was provided to the DG by Public Grievance Cell on 18.12.2009 alongwith their submissions. Though the data obtained from Public Grievance Cell has been reproduced in the DG report, the document containing the submissions and test results has not been made part of DG report.

16.7 As per DG report, out of total 2014 meters tested by CPRI in the period July, 2007 till 30.11.2009, 1847 meters had positive errors and only 167 meters had negative errors. The DG has noted that 91.7 % of the meters tested showed positive errors, while only 8.3 % meters have shown negative errors. DG has also further noted that out of 2014 meters tested till 30.11.2009 a total of 96 meters (4.76 %) have shown positive error of more than 2.5%, exceeding the maximum permissible error limit prescribed for Class-1 meters. It is also borne out from the DG report that after regulations of Central Electricity Authority (CEA) were published in March, 2006, the Bureau of Indian Standards (BIS) published IS 15707: 2006. According to new Indian Standards, the maximum permissible error for the meters having accuracy of Class 1.0 (which are meters generally used by the domestic consumers) shall be + 2.5% under on site conditions.

16.8 The DG has concluded that since overwhelming percentage of meters tested have shown positive errors this is against the principle of normal distribution curve. In view of these facts the DG report concludes that there is substance in the allegation that the meters installed by the DISCOMs have an upward bias in measurement of electricity.

16.9 Based upon the analysis of the data supplied by Public Grievance Cell the DG has come to the conclusion that fast running of meters results in inflated bills for the consumers. In the end the DG has come to the following conclusion:

The fact that the DISCOMs are supplying electricity to the consumers through meters, which are not correct, tantamount to imposing unfair conditions in sale of electricity and consequently abuse of their position of dominance in terms of provisions of Section 4(2) (a) (i) of the Competition Act, 2002

16.10 On the other hand, the DISCOMs have contended that DG has relied on test results supplied by Public Grievance Cell but that report has not been shared with the DISCOMs and hence, findings of the DG are against the principle of natural justice.

16.11 It has been further contended that the report of CPRI supplied by Public Grievance Cell and relied upon by the DG is defective and is not based on any survey and sample size is too small to be held to be representative in character for all the consumers in Delhi. The three DISCOMs have approximately 30 lakh consumers out of which DG has referred to only 2014 meters which comes to less than 0.1 % of the total consumers to whom electricity is being supplied in Delhi.

Further, even the Ministry of Power in its report had accepted that the sample size was defective and too small.

16.12 DISCOMs have also contended that the DG has failed to appreciate the fact that the relevant BIS standards applicable in the present case i.e. IS 15707: 2006, provides that the maximum permissible error in case of Class-1 meters is + 2.5%. Therefore, a meter showing error within this limit is deemed to be a correct meter.

16.13 The issue of fast running of meters is related to consumer disputes and has no bearing on the competition issues. Such issues can be looked into by the appropriate authority like Consumer Grievance Redressal Forum & Ombudsmen established under the Electricity Act.

16.14 There is no denying the fact that fast running of meters results in inflated bills for consumers. DISCOMs would earn more revenue for less amount of electricity supplied and on the other hand the consumers may end up paying more than what they are consuming. Undoubtedly, this will amount to unfair practice affecting consumers adversely. However, it needs to be examined whether in the present case there is sufficient evidence to establish such unfair practice which tantamount to an abuse of dominant position by DISCOMs.

16.15 It is evident that DG has based his finding solely on the data of test results of meters of aggrieved consumers provided by the Public Grievance Cell constituted by the Government of NCT (Delhi). These tests were conducted by CPRI, Bangalore, under the aegis of Public Grievance Cell. It is also noted that this data is compilation of test results conducted during the period sunning from July, 2007 to November, 2009, on the complaints, of those consumers who suspected that their meters. were running fast. A total of 2014 meters were tested during this period.

16.16 It is seen from DG's report that NDPL has a consumer base of approximately 11 lakhs consumers whereas, BYPL and BRPL together supply electricity to 31 lakhs consumers in Delhi. Furthermore, out of total consumer base of approximately 42 lakhs, only 2014 meters have been tested in a span of around 2 ½ years. This constitutes a miniscule of total consumers and is less than 0.1%. The size of the test results is too small, and in view of this it is difficult to take it as a representative sample of the large consumer base in Delhi. Moreover, it is also clear that the compilation of test results is not on account of any random sampling which had been undertaken by CPRI. In this test drive commencing from July, 2007, the meters of only those consumers were tested who were suspecting their meters to be running fast. Therefore, the test results compiled by CPRI cannot be taken to be representative sample so as to draw a conclusion that more than 90% of the meters in Delhi are running on positive side. Similar view was expressed by the Committee constituted by the Ministry of Power in its report submitted in September, 2008. This report finds place as Annexure F in the DG report.

16.17 It is also borne out from the examination of said test results reproduced in DG report that out of 2014 meters tested till November, 2014, only 96 meters (0.76%) have been found to be erring on positive side beyond permissible limit of + 2.5% specified by BIS for Class 1 meters. This number is insignificant considering the fact that total consumers in Delhi are more than 40 lakhs. Furthermore, it is not discernible from the DG report that out of 96 meters showing error beyond the permissible limit how many of them were tested before May 20 2009 when Section 4 of the Act came into force. The report is also silent about the fact that how many meters out of 96 defective meters were replaced by the DISCOMs before the date of enforcement of the Act. As regards those meters which were found running on the positive side, but within permissible limit, it is manifestly clear that no fault can be found on this account because they were running within the accuracy limit stipulated by BIS, and they are deemed to be correct meters in terms of regulations framed by CEA.

16.18 On the basis of the facts and circumstances of the case and the above analysis, it cannot be said in this context that the DISCOMs have abused their dominant position in terms of the provisions of Section 4 of the Act. Therefore, Issue No. 5 is answered in the negative.

In the light of foregoing discussion, the Commission comes to the conclusion that no case of violation of Section 4 of the Act is established against the DISCOMs and conclusions drawn by the DG in this respect cannot be accepted. In view of the above findings, the matter relating to this information is disposed off accordingly and the proceedings are closed forthwith.

Secretary is directed to inform the parties accordingly.

While concurring with the main conclusions of Majority Order this supplementary has been prompted by the allegation of the informant that the DISCOMs in Delhi have used their dominant position in their licensed area to foreclose competition in the meter market. The Majority Order considered one product market the distribution and retail supply of electricity on the consideration that meters and other accessories are part of that business market. Regulation 35 of the Delhi Electricity Supply Code issued by DERC under Section 55 of the Electricity Act, modifies the picture and brings to focus and for enquiry two markets: i) distribution and retail supply of electricity and ii) meter market.

Meter related activities include purchase of meters, testing, installation, sealing and reading of meters. Use of meters in India is governed by Section 55 of the Electricity Act, 2003 -Use of Meters, with the proviso that "the licensee may require the consumer to give him security for the price of a meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase a meter". In Delhi, Regulation 35 of Delhi Electricity Supply Code and Performance Standard Regulations, 2007 stipulates, "The consumer, if so desires, may procure a meter conforming to the regulations issued by the authority under Section 55 of the Electricity Act and the licensee shall test, install and seal the meter."

Regulation 35 issued by DERC thus permit consumers to buy their own meters or opt for meters supplied by the Distribution Companies for which security deposit is collected and rental paid. While installation, testing and sealing of meters are to be done by the DISCO Ms themselves as part of their licensed activity, in so far as retail supply of meters are concerned, DISCO Ms are not the sole providers and consumers through regulatory provisions are given the choice to procure meters from the open market. It is the consumer choice that prompts us to consider the market for meters as a distinct market and not as an integral part of the market for 'distribution and retail supply of electricity'. In other words, it draws a distinction between the markets for retail supply of electricity and the instrument of measuring consumption. This Supplementary Order is to examine dominance of DISCOMs in the meter market and its alleged abuse.

The issues for determination are same as stated in the Majority Order:

Determination of relevant product/geographical market

Determination of dominance

Abuse of dominance

Determination of Issue No. 1

Relevant product market is defined with regard to Section 2(r) and 2(t). The Majority Order defined the first relevant product market namely the distribution and retail supply of electricity.

As per the regulations of CEA and DERC, electricity has to be supplied through meters conforming to BIS approved standards, ie., IS 13779:99 in case of the domestic consumers or IS 14697:99 for the bulk consumers. This being a regulatory requirement, meters conforming to these standards can only be substituted with each other. No other category of meters can be considered as possible substitutes. Hence, only BIS approved meters constitute the relevant product market.

Further, the competitive conditions prevailing in the retail market where end users are purchasing meters differ from the conditions that prevail in the wholesale/bulk market where DISCO Ms are purchasing the meters through an international competitive bidding process from the meter manufacturers. Therefore, though the characteristics of the meters transacted remain same with the same end-use, the market for BIS approved meters in the current circumstances could be split in two distinct segments - Wholesale/bulk market of BIS approved meters and Market for Retail supply of BIS approved meters to end consumers.

The market for 'retail supply of BIS approved meters' is the relevant product market in the current case as the issue under examination is the alleged foreclosure of competition in this market by abusive practices of the DISCO Ms.

Section 2(s) defines the relevant geographic market. The Majority Order defines the relevant geographic market for the first product as the licensed area of the DISCOMs. In the case of meters, in Delhi, meters can be procured from either the respective DISCO Ms or from their approved manufacturers/vendors only. This implies that the conditions of competition in a particular license area are determined by the respective DISCO Ms which are distinctly homogeneous and can be distinguished from other license areas. Further, with reference to the factors laid down in Section 19(6) of the Competition Act 2002 it can be 'said that there are local specification requirements stipulated by the DISCO Ms, there may arise need for after-sales service and it may not be economical for individual consumers to procure meters from distant markets. In view of these factors, the relevant geographic market for retail supply of meters would be restricted to the licensed distribution area of the DISCO Ms.

Determination of issue No. 2

As observed in the Majority Order dominance of DISCOMs in the distribution and retail supply of electricity market is statutorily established. In the market for meters, purchases of meters by DISCOMs are all-India. This market is competitive as there are about 200 meter manufacturers in the country. No facts and evidences are brought on record in the DG's report to demonstrate that the DISCOMs in Delhi account for a large share of the country-wide sale of meter manufacturers to establish their dominant position.

DISCOMs procure and install meters for the consumers from an empanelled list of manufacturers/vendors. Consumers can purchase directly from this empanelled list or from the DISCOMs. Dominance of DISCOMs in the meter market is attributed to the restricted purchases of BIS meter from the panel.

It is essential to assess dominance in terms of the factors listed in Section 19(4) of the Competition Act, 2002. As borne out in the evidences gathered by the DG, the DISCO Ms virtually control the entire market share within their areas of operation in supply of BIS approved meters. This is cogently substantiated by the following figures. Only 1 customer in the case of NDPL out of the customer base of 11 lakh, only 49 in case of BRPL out of customer base of 16 lakh and only 68 customers in case of BYPL out of a customer base of 15 lakh consumers have procured meters from the approved vendors of manufacturers empanelled by them This makes it amply clear that in terms of market share, the DISCO Ms enjoy dominance in the supply of BIS approved meters to the final consumers.

With the exclusive licensing and regulations entitling DISCO Ms for testing, sealing, and installing the meters, they enjoy distinct commercial advantages over the approved vendors/manufacturers.

The current composition of supply sources of meters by the end consumers and given the structure of electricity markets where open access yet remains to be operational, consumers' dependence on the DISCO Ms is beyond dispute.

Given that the entry of a particular vendors/manufacture of meters in a licence area is contingent upon the respective DISCOM's approval and keeping in view the low level of awareness among consumers of their right to buy meters from the open market, there are entry barriers in the retail supply of meter market.

The DG report avers that the low level of awareness of end consumers as regards Regulation 35 have enabled the DISCOMs to operate independently of market forces.

Based on the above analysis, it can be stated that the DISCOMs enjoy a dominant position in the market for supply of BIS approved meters to the end consumers in Delhi.

Determination of Issue No. 3

Are the DISCOMs indulging in 'Abuse of Dominance' (AoD) in the meter market? Having concluded on the dominance of the DISCOMs in the market for meters, it is now to be examined whether by any of their conduct or practice they have abused their dominant position leading to distortion of market or foreclosure of competition.

The fact that an enterprise hold a dominate position is in itself not a contravention of the law. It is not the dominance, but its abuse, which is prohibited in the law. Abuse of Dominance is dealt with in Section 4 of the Competition Act and the allegation under consideration is with respect to the contravention of Section 4(2)(a)(i) and (ii), which state that there shall be an abuse of dominant position if a dominant enterprise or group directly or indirectly imposes unfair or discriminatory (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods and services.

The informants allegation of violation of Section (4) is with regard to i) unfair condition in the purchase of meters sold by the DISCOMs and ii) unfair condition in the supply of electricity on account of the presence of fast running of meters.

Further, it has been alleged that competition in the meter market has been foreclosed by the DISCOMs, which amounts to contravention of Section 4(2) (c) of the Competition Act, which states that there shall be an abuse of dominant position if a dominant enterprise or group, indulges in practices resulting in denial of market access (in any manner)

Central to the argument of AoD (under Section 4) by the DISCOMs is that of consumer choice and its exercise which is allegedly lacking. Evaluating the role and requirement of 'consumer choice' in the meter market is necessary to establish AoD.

Regulation 35, permits consumers to procure meters from any manufacturers as long as they conform to the BIS approved standards. The actual purchase pattern of meters in the three relevant geographic markets in Delhi, as revealed by the investigation conducted by the DG, shows that in each of these areas only a miniscule share of the consumers purchase their own meters, and these purchases are from the empanelled vendors.

The survey conducted by the DG indicates that consumers are not aware of the possibility of buying the meters directly from the market or about the existing enabling regulations. It was found that less than 20% of the users are aware that they can purchase the meter from an independent vendor/agency other than DISCOMs.

The low level of awareness amongst the consumers, according to DG, can be attributed to the inadequate efforts made by the DISCOMs for educating the consumers regarding the existing regulations and their right to buy meters conforming to the BIS approved standard, i.e., IS 13779:99. Till the investigation conducted by DG, the websites and publicity campaigns were stating that a consumer may procure a meter only through vendors certified by the licensee, which amounts to distortion of the regulatory provisions. A list of such certified vendors was displayed on some of the websites. When there are as many as 200 licensed manufacturers of the BIS approved meters in the country and 10 of them have been given license to manufacture meters in Delhi itself, the lists posted on the website was restricted to only select manufacturers/vendors, say 4 in some cases.

In the Connection forms posted on the websites of the NDPL, BRPL and BYPL, choice of meter did not feature at the time of the investigation. The forms displayed on the websites on November 19, 2010 also did not specifically mention the options open to consumers. It is however, shown in the forms submitted by the DISCOMs before the Commission.

The "factors enumerated in the preceding paragraphs, substantiate the fact that despite regulatory provisions, the consumers are unable to exercise their choice as the market is restricted to the DISCOMs and to the empanelled list specified by the DISCOMs. The prevalent information asymmetry in the market leads to the widely held presumption among the consumers that meters and electricity are bundled products and the DISCOMs are the sole providers of it.

Nevertheless, it is important to examine whether given a choice, the consumers would have opted for purchasing their own meters. Consumer decisions are guided by several considerations, which inter-alia include, price, preference, convenience, specifications, quality and reliability, after-sales service etc.

Firstly, bulk purchase by the DISCOMs enables them to get a discount on the price of meters. It is unlikely that individual purchases will be entitled to such discounts. There is no denying that a consumer buys or has the incentive to buy the meters from the market if there is a price or quality differential between the two sources, i.e., DISCOMs and other vendors/manufacturers and only if the differential is wide enough to cover for any transaction cost that a consumer will need to incur from buying from the market rather than the supplier of electricity. No such facts pertaining to price differential has been brought on record. It cannot be conclusively stated that consumers will gain from lower prices in the market if they are given the choice to switchover from Discom to the manufacturers/vendors.

Secondly, a consumer pays a nominal rental if the Discom fixes the meter. The meter rental is a part of the fixed cost in a tariff schedule. A part of security deposit collected from consumer is also towards cover of cost of meter purchase. The meters are listed on the asset register and the Discom gets the benefit of depreciation. The pricing of meters, the cost of services are all part of rate fixation and tariffs are finalized by DERC. In the present case, if the consumer purchases the meter on his own, he does not get any rebate in the fixed monthly charges or upfront deduction in the first bill for cost of meter as per the information available in the public domain. It is again difficult to conclusively state that consumer's choice in meters will be an effective choice due to cost differential.

The issue whether a consumer will exercise his choice is also guided by several other conditions including that of convenience and maintenance. If a meter burns down when the Company provides for it, then for the first burn-out it is replaced free of cost by the company. For the next burn-out the consumer is required to pay for the meter. However, there is no mention that similar facility will be available to the consumer in case he purchases the meter on his own. The fact that the right to test, install and seal the meters lie with the Discom, as per the existing regulations too adds to the convenience quotient for consumers for buying the meters from the Discom rather than getting it from vendors/manufacturers. It is also feared that consumers may face procedural hassles and delay in getting the meter tested and sealed in case of procurement of meters from open market.

The DG's conclusion however, that the practices followed by the three DISCOMs amounts to abuse of dominant position wherein they have indirectly imposed unfair conditions on the purchase of meters by making the consumers believe that meters are to be bought mandatorily from the DISCOMs as part of the electricity supply may perhaps be a rather simplistic approach. The absence of information as regards consumer choice cannot be categorized as abuse of dominance.

All evidence proves to the point that consumers do not gain from purchasing on their own. DISCOMs by including the price within the tariff and by providing certain additional facilities as free testing and free first burn out replacement tend to dampen consumer initiatives.

The NCR region consists largely of household consumers and commercial establishment. Open Access is not yet available to these consumers. In terms of quantum of electricity consumed and in terms of supply it is very unlikely that consumers will be inclined to exercise their choice in the purchase of meters.

The informant has additionally alleged that the DISCOMs have through their conduct restricted the market for meters and denied access of the NCR meter market to eligible manufacturers other than the handful of specified manufacturers/vendors. Competition has been hindered through erection of entry barriers. Foreclosure of competition was examined in the light of existing 200 meter manufacturers in the country. The argument that listing on website provides publicity only to a few manufacturers is not a sufficient ground to suggest foreclosure. Empanelment does not deny other manufacturers entry in the meter market of DISCOMs as the list of vendors is revised at regular intervals. Vendors are selected on the basis of competitive bidding. An all India meter market in which large number of manufacturers catering to the needs of DISCOMs all over the country makes the market competitive.

On the basis of the facts and the analysis outlined it is difficult to establish that DISCOMs are indulging in foreclosure of competition in the meter market of the NCR region.

There is one further issue that this supplementary would like to comment on namely, on the issue of fast running meters which relates to meter functioning and servicing of meters that falls in the domain of distribution and supply of electricity business. The Commission in their Order Under Section 26(i) had specifically mentioned that the investigation examine the matter of fast running reports as it is matter of long standing public concern.

Fast running meters result in inflated bills for the consumer. For the DISCOMs it shows up as lower commercial and transmission & distribution losses. Consumers may end up paying more than what they are consuming.

The Majority Order on the aspect of fast running meters observed that on the basis of the facts and circumstance of the case it cannot be said that the DISCOMs have abused their dominant position in terms of the provisions of Section 4 of the Act. While the observations of the Majority Order are valid, in this supplementary Order we only wish to add that to establish unfair practice under the Competition, Act it has to be shown that the fast running meters are beneficial to DISCOMs.

DISCOMs maintain that all fast running meter complaints are examined and rectified if found inaccurate on testing. They also contend that in a regulated market where tariffs are fixed by the DERC no gains accrue to them from fast-running meters as it is eventually adjusted while fixing tariffs.

In the light of foregoing discussion this supplementary Order comes to the conclusion that no case of violation of Section 4 of the Act is established even in the relevant meter market.

In view of the above findings the supplementary Older is in effect in agreement with the Majority Order.

R. Prasad, (Member)

I've gone through the majority order of the Commission in this case as well as the dissenting order of Shri P. N. Parashar, Member. I agree with Shri Parashar on the issues discussed by him. On the other two issues, I am passing a separate order.

An enquiry from Central Power Research Institute, Bangalore showed that a sample survey of the electric meters was carried out in Delhi of the different DISCOMs. The results of the sample survey of 2041 meters showed that 1847 meters had an error on the positive side. In fact 91.7% of meters had errors on the positive side. The permissible limit for an errors is ±2.5% whereas in the sample many meters showed error in excess of +2.5% on the positive side. In fact a high powered committee under the Ministry of Power considered the report and got a study conducted by CEA about 2,44,305 consumer metres and it was found that 74.38% of the meters had errors on the positive side. On the basis of the reports it can be concluded that many of the meters installed by DISCOMs did not give accurate measurement of electricity and therefore the consumers in Delhi were put to a loss. This could result due to the low competition in the market. As the DISCOMs were supplying electricity through meters which were not correct, it amounts to imposing unfair conditions in sale of electricity and abuse of dominance as unfair conditions have been put on the consumers.

The question is whether the sample size was too small to come to a conclusion of overbilling by the DISCOMs. In this connection it be necessary to examine the ratio laid down by the Supreme Court in the case of C.T.O. v. H. M. Yusufally, H. M. Abdulally 90 ITR 271. In this particular case the Commercial Tax Officer carried out a survey in the premises of the concerned party on two days he found that is sales were not properly recorded in the books of accounts. On the basis of two-day sales which were found in excess of the recorded sales, the officer rejected the books result and estimated the turnover of the party based on his findings that some sales were recorded out of books, in this particular case no doubt the sample size was very small but even then the Supreme Court upheld the findings of the C.T.O. In this case also, the sample size is small but there is no doubt that the consumers were suffering a loss as they had to pay for electricity which they had not consumed. The DISCOMs were not bothered about the fast running meters especially as there was no Competition in the market which has been allocated to the DISCOMs. This is a serious issue and just because the sample size was is too small one cannot disregard it.

The DISCOMs are raising its electricity bills in 57 days in one cycle and they are also raising bills for another cycle of 63 days charging the consumers on prorata basis which in effect causes no difference on the outgoings of a consumer. The additional DG has worked out as to how the calculation on the basis of prorata billing amounts to excess charge payable by a consumer. The amount charged to the consumer may be small but it is an unfair charge and it arises mainly due to the fact that the billing is done on bimonthly basis instead of monthly basis.

The supply of electricity consists of three relevant markets (i) the supply of electricity, (ii) the meter market as the meters are being installed by DISCOMs instead of by the consumers, (iii) the billing market. Abuse of dominance exists in all the three markets. The issue has got to be seen with respect to the factors mentioned in Section 19(4) of the Competition Act 2002. There is no doubt that the DISCOMs are the dominant players in the areas which has been assigned to them because in that area they are in a position of strength which allows them to affect their consumers in its favour. The factors which we have to consider under Section 19(4) of the Act is (i) Market share of the enterprise - the market share of the enterprise is hundred percent as there is no competitor and it is monopoly market. (ii) and resources of the enterprise - compared to the consumer the size and the resources and enterprise in the monopoly market is extremely large. (iii) Size and importance of the competitors - there are no competitors as it is a monopoly market. (iv) Economic power of the enterprise including commercial advantages over competitors - as it is a monopoly market there cannot be comparison with the competitors. (v) Vertical integration of the enterprises or sale of services network of such enterprises - the enterprises are vertically integrated as the supplier of electricity, supply of meters and the billing is all done by the DISCOMs. (vi) Dependence of consumers on the enterprise - the consumers are totally dependent on the enterprise as there is no other competitor in the monopoly market. (vii) Monopoly in a dominant market were acquired as a result of any statute or by virtue of being a government company or a public sector undertaking or otherwise - the DISCOMs are a monopoly and the monopoly status is given by the government. (viii) Entry barriers etc. - as it is a monopoly market all the competitors are barred from the market. (ix) Countervailing buying power - as there is no competition in the geographical area, it is not necessary to consider this aspect. (x) Market structure and size of market - the market structure and the size of market is as laid down by the government will allot an area to the DISCOMs. (xi) Relevant social obligations and social costs - the social obligation as the DISCOMs have to supply electricity to all its consumers. (xii) Relative advantage by way of contribution to economic development etc. - due to lack of competition in the area allotted to the DISCOMs the total lack of competition which allows the DISCOMs to abuse its consumers by supplying electricity overcharging the consumers and even overcharging them in billing. As the consumers are totally dependent on the DISCOMs, there is an abuse of dominance in the relevant markets of supply of electricity, supply of meters and billing.

The DISCOMs have abused their dominance in the relevant markets for supplying electricity, supply of meters and billing and there is therefore a contravention of Section 4 of the Competition Act. The three DISCOMs are therefore directed to follow the directions issued by Shri P. N. Parashar in his order. They are also directed to ensure that faulty meters are removed immediately and also ensure that such meters are not supplied to the consumes. The DISCOMs should also follow the monthly billing system so that no prorata system of billing is followed.

P.N. Parashar, (Member)

I have gone through the Majority Order of the Commission in this matter. While concurring with the majority opinion on various points, with great respect I would like to record a dissenting Order on certain points and issues. On the findings of the majority regarding non-infringement of the provisions of Section 4(2) of the Competition Act, 2003 the Act) by the opposite parties also, I differ from the Majority Order.

The Majority Order deals in detail with the factual background, the report of the Director General (DG), the submissions and objections of the opposite parties as well as the scope and applicability of Section 3 and 4 of the Act. In order to avoid repetition of the facts and for the sake of brevity, I propose to restate the relevant facts only in brief and will refrain from narrating the details. However, to further clarify certain aspects, I would like to give additional reasons at appropriate places while agreeing with the majority view. Accordingly, I proceed to pass the order as follows:

The relevant facts relating to the instant information may be summarized as under:

69.1 The present information has been filed by Neeraj Malhotra (the informant) under Section 19 of the Act against North Delhi Power Limited (NDPL/ opposite party No. 1), BSES Rajdhani Power Limited (BRPL/ opposite party No. 2) and BSES Yamuna Power Limited (BYPL/ opposite party No. 3) (collectively the opposite parties) alleging the violations of the provisions of Section 3(1), 3(2) and 3(3)(a) and 3(3)(b) read with the provisions of Section 4(1) and 4(2)(a)(i) of the Act.

69.2 As per the information, the opposite parties are private companies engaged in supply and distribution of electricity to the consumers within the territory of Delhi for consideration. It has been alleged that the opposite parties have made it compulsory for their consumers to install the meter provided by the opposite parties and that these meters record higher readings than the actual consumption by the consumers.

69.3 In support of the allegations, the informant has cited newspaper reports published in 'The Hindu' on 14.04.2005 and 09.04.2008, The Hindustan Times' on 08.04.2008 and 'The Times of India' on 08.04.2008.

69.4 According to the information, as per the report published in 'The Hindu' on 14.04.2005, in a 'meter testing drive' undertaken by the power DISCOMs in July - August, 2004 only around 93% of the meters checked were found to be working within the specified limits, according to statistics given by the Delhi Electricity Regulatory Commission DERC).

69.5 Further, in the items published in The Hindustan Times' on 08.04.2008 and 'The Hindu' on 09.04.2008, it was reported that the Electricity Consumer Advocates Committee had noted that most of the meters tested by the Central Power Research Institution of Bangalore (the CPRI) under the aegis of the Public Grievance Cell (the PGC) were not conforming to the prescribed standards and the meters so installed by the above mentioned enterprises were giving readings upto 2.5% faster as against the 0.5% margin allowed.

69.6 In another news article published in 'The Times of India' on 23/3/2009', it was reported that a Delhi Government Inspection Report had concluded that almost 90% of the electricity meters checked in the National Capital Territory of Delhi (the NCT) were overcharging the consumers, running 2.5% higher than the error margin limit. As per the Information, The Hindustan Times' published on 9/6/2008 had reported that the Hon'ble High Court in its judgment had held that digital electricity meters with an error margin of more than 1% should be considered as defective.

69.7 It has been alleged that the opposite parties purchased and installed the meters themselves and did not allow the consumers to procure and buy the meters of BIS Standard manufactured by any of the manufacturers, thereby reducing the competition in the market in this field. It has been further alleged that almost 82% of the meters installed by the opposite parties are found to be running on the plus side of 2.5% of the prescribed limit.

69.8 It has been submitted by the informant that on the basis of the news item published in The Hindustan Times' on 08.04.2008, an investigation had been directed by the Department of Power, the PGC, Government of NCT of Delhi.

69.9 It is alleged by the informant that the opposite parties are abusing their dominant position within the public domain by imposing unfair and discriminatory conditions in purchase of goods i.e. electricity meters and also services, thereby leading to a foreclosure of competition by hindering entry into the market and violating the provisions of Section 4(1) and 4(2)(a)(i) of the Act.

69.10 The informant has also alleged that the opposite parties function as a cartel and the practice carried on and the decision taken by them, jointly and severally, has the effect of determining the prices of the services being supplied by them and being purchased by its consumers. Further, it is alleged that the opposite parties are overcharging the consumers and thus their practices and decisions have the effect of indirectly determining the sale prices of the services rendered by them.

69.11 It has also been alleged that the arrangement, understanding and concerted action on the part of the opposite parties to supply and install the electricity meters themselves and not allowing its consumers to purchase and install meters of their own choice has the effect of limiting and controlling the production and supply of goods (electronic meters) and provisions of services in the market. As per the informant, this arrangement, understanding and concerted action on the part of the opposite parties, consequently causes an appreciable adverse effect on competition within India and has the effect of driving existing competitors manufacturing and selling electronic meters out of the market thus foreclosing the competition by hindering their entry into the market.

69.12 The informant has infer alia prayed for the following:

(i) That the Commission should enquire into alleged contravention of the provisions of Section 3(1), 3(2) and 3(3)(a) and 3(3)(b) read with the provisions of Section 4(1) and 4(2)(a)(i) of the Act;

(ii) That the Commission may order that the opposite parties be directed to discontinue and not to re-enter in the alleged agreements and to discontinue the practice and the decisions taken by them leading to indirect determination of the sale prices of the services rendered by them;

(iii) That the Commission may order that the opposite parties discontinue the abuse of their dominant positions which impose unfair and discriminatory conditions in purchase of goods and services by their consumers; and

(iv) That the Commission may penalize the opposite parties for alleged violations to the extent of 10% of their average turnover for the fast three preceding financial years.

The Commission considered the information and before proceeding to pass an order under Section 26(1) of the Act, sought view/ comments of the DERC. The DERC vide its letter to the Commission dated 30.09.2009 inter alia responded:

....

Matters relating to electricity tariff have to be decided as per the provisions of the Electricity Act, 2003 and DERC Regulations. Accordingly, Competition Commission of India may not be appropriate forum to deal with such issues.

Specific issues alluded to by the Petitioner accusing the DISCOMs of abuse of their dominant position may be looked into by the Competition Commission of India in terms of Competition Act, 2002.

After considering the views/ comments of the DERC and the entire relevant material on record, the Commission found that there exists a prima facie case in the present matter and vide Order dated 26.11.2009 passed under Section 26(1) of the Act directing the DG to conduct an investigation into the matter. In the Order following directions for investigation were also given;

a) Whether the information is readily available to the electricity consumers regarding their right of getting the meter of their choice installed?

b) Whether meters are easily available in the market? In other words, whether consumers have wider choices to procure meters in case they desire to install their own meters?

c) Whether there are enough number of suppliers of meters to the consumers and whether they are operating competitively?

d) Factual position in respect of the allegations that almost 82% of the meters installed by the DISCOMs are found to be running on the plus side by 2.5% as alleged and hardly any meter is running on slower side?

e) Efforts made by the Respondents to educate/ help consumers for redressing grievances regarding choice of installation of their own meters, replacement of defective meters etc. the level and extent of advertisements, publicity campaigns by the Respondents in this context inter-alia need to be looked into.

The DG in compliance with the directions issued by the Commission conducted investigation, collected evidence and submitted report, dated 19.2.2010. The report of the DG including exhibits runs into two volumes.

In the Majority Order, observations and findings of the DG have been dealt with in detail and these details need no repetition. However, certain points dealt with by the DG relating to the determination of relevant market require to be highlighted. Hence, I shall refer to the report of the DG in this order at appropriate stages.

The opposite parties submitted their detailed replies including preliminary objections dated 28.06.10 and dated 23.04.10 respectively against the report of the DG. A brief summary of the common points raised by the opposite parties in their replies is as under:

74.1 That the order dated 26.11.2009 directing the DG to investigate was passed without any basis and there was no evidence or ground for the Commission to conclude that a prima facie case is made out and direct an investigation. It is further submitted by the opposite parties that the order dated 26.11.2009 was unsubstantiated and is without justification and reasoning or basis.

74.2 That the preliminary objections raised by the opposite parties should have been decided before proceeding with the matter on merits. In support of their submission, the opposite parties have cited the judgments of the Hon'ble Supreme Court in Arun Agarwal v. Nagreeka Exports (P) Limited and Anr. : (2002) 10 SCC 101 and K. Kamaraja Nadar v. Thevar and Ors. AIR 1958 SC 687 and Union of India v. Ranbir Singh Rathaur and Ors. 2006 11 SCC 696.

74.3 That the relevant product market has been wrongly defined by the DG and the Commission. It is contended by the opposite parties that there is a lack of clarity on the allegations regarding abuse of dominance. It is further submitted by the opposite parties that they are in the business of distribution and retail supply of electricity and not in the business of manufacturing of meters. Accordingly, the opposite parties have argued that the relevant product market in this case is 'Supply of Electricity' and not the meter market. It is contended that the definition of 'relevant market' by the DG is wrong as he has ignored the provisions of Section 19(5), 19(6) and 19(7) of the Act, which provide parameters for defining relevant market and instead relied on extraneous reasons for the purposes of competition investigations such as the CEA regulations, BIS standards etc. It has also been contended that the DG'S findings are based on wrongful assumptions/ definition of 'relevant market'. In view of the above submissions, it is argued that DG'S conclusion that the opposite parties are abusing their dominant position has to be rejected.

74.4 That the issues such as the alleged fastness of the meter/ billing processes adopted by them are not relevant for the purposes of competition issues and are extraneous and have no bearing on the issues before the Commission. It is submitted that the above issues are no longer res-integral in view of the judgments of the Hon'ble High court of Delhi in (a) Suresh Jindal v. BSES Rajdhani Power Limited 126 (2006) DLT 49 : 132 (2006) DLT 339, as upheld by the Hon'ble Supreme Court in (2008) 1 SCC 341 and (b) BRPL v. V.K. Jain LPA No. 748 of 2009 wherein Hon'ble Division Bench of Delhi High Court has upheld the accuracy limits as provided under the Indian Standards.

74.5 That the issues such as alleged fastness of the meter/ billing processes are highly technical and can only be dealt with by the sector regulator i.e. Delhi Electricity Regulatory Commission (DERC). It was also submitted that the tolerance limit which is alleged to be illegal and wrong is within the permissible limits as prescribed under applicable law and are covered by various BIS standards. It was further argued that the Commission does not have jurisdiction to delve into matters pertaining to electrical meters and specification in view of the Electricity Act, 2003 (Electricity Act).

74.6 That the opposite parties are accountable to the DERC which is empowered and has jurisdiction to look into all matters including anti-competitive behavior relating to the electricity sector under Sections 60 and 66 of the Electricity Act. In this regard, reference is made to the notification of the DERC (Guidelines for establishment of Forum for redressal of grievances of the consumers and Ombudsman) Regulations 2003 (CGRF Regulations), and constitution of the Consumer Grievance Redressal Forum and the Ombudsman in 2004 which provide mechanism to adjudicate upon and redress various grievances relating to restrictive trade practices, unfair trade practices, deficiency in service and over charging etc. It is contended that if the Commission also looks into the redressal of consumer grievances, it would result in exercise of parallel jurisdiction leading to conflicting orders and consequences. In support of this contention, the opposite parties placed reliance on the decision in the case Maharashtra Electricity Regulatory Commission v. Reliance Energy and Ors. (2007) 8 SCC 381.

74.7 That the meters which are installed in Delhi have to meet certain specifications and BIS standards. It has been pointed out that the opposite parties select the suppliers of meters who meet the technical and financial parameters through international competitive bidding every year and hence it cannot be said that there is foreclosure of the competition. Further, it was submitted that the DERC has also recently amended and declared the competitive bidding guidelines which are binding upon the licensees i.e. the opposite parties.

74.8 That if any consumer elects to purchase a meter, the consumer has to procure the same only from the approved manufacturers because meters of such approved manufacturers meet the technical specifications and are compatible with the network of the opposite parties. It was explained that such list is only indicative and that consumer is free to buy meter from any other manufacturer provided they meet the aforesaid criteria. It is submitted by the opposite parties that the list of dealers is displayed on website for the benefit of consumers and for awareness of the public, the opposite parties have distributed lakh of pamphlets and have published advertisements in newspapers so that consumers can choose their own meters.

74.9 That with respect to the alleged fastness of meters, the DG has relied on a report which is based on assumptions and conjectures and has been repudiated by the Ministry of Power. It is further argued that the process adopted by the DG in coming to the conclusions is flawed and the report as such deserves to be rejected. It is further contended that report also cannot be relied upon by the DG as the copies of the same were not supplied to the opposite parties and hence, the findings of the DG are against the principles of natural justice.

The opposite party No. 1 has specifically submitted that it has taken and continues to take certain initiatives towards enhancing consumer awareness regarding the right to procure their own meters according to the prescribed standards and specifications. The opposite party No. 1 has listed the different methods adopted in this regard including posting the information on their website, displaying printed posters at all consumer care centers, distributing pamphlets, broadcasting of radio jingles and newspaper advertisements.

In support of the argument that the process adopted by the DG in coming to the conclusions is flawed, the opposite party No. 2 has submitted that while the DG has referred to only 2041 meters out of 30 lakh consumers, the CPRI whose alleged reports have been referred to by the PGC and relied upon by the DG, tested more than six lakh meters for BSES i.e. opposite party Nos. 2 and 3 and found the meters fit for installation.

After considering the entire relevant material on record including the report of the DG and the submissions of the parties, the following issues arise for determination:

I. Whether the Commission has jurisdiction in the present case;

II. Whether the preliminary objections raised by the opposite parties should have been decided before further proceeding with the matter on merits;

III. Whether the opposite parties have violated the provisions of Section 3 of the Act; and

IV. Whether the opposite parties have abused their dominant position in violation of the provisions of Section 4 of the Act.

Issue I: Whether the Commission has jurisdiction in the present case

The opposite parties have contended that the Commission does not have jurisdiction to delve into matters pertaining to electrical meters and specifications in view of the Electricity Act. It was also submitted that the opposite parties are accountable to DERC which is empowered and has jurisdiction to look into all matters including anti-competitive behavior relating to the electricity sector under Sections 60 and 66 of the Electricity Act.

It may be noted that the mandate of the Commission as enshrined in the preamble of the Act is:

... to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

The Commission may look into any matter relating to goods or provision of services that involves anti-competitive practices. The present matter relates to allegations of abuse of dominance and anti-competitive agreement by and between the opposite parties with respect to the supply of electricity which is a service as defined in Section 2(u) of the Act and meters which are covered under the definition of goods provided in Section 2(i) of the Act respectively.

Section 2(u) of the Act defines 'service' to include supply of electrical or other energy. The definition reads:

"service" means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial matters such as banking, communication, education, financing, insurance, chit funds, real estate, transport, storage, material treatment, processing, supply of electrical or other energy, boarding, lodging, entertainment, amusement, construction, repair, conveying of news or information and advertising;

Section 2(i) of the Act provides an inclusive definition of 'goods'. As per the definition in the Act 'Goods' means goods as defined in the Sale of Goods Act, 1930. Section 2(7) of the Sale of Goods Act, 1930 defines goods as follows:

"goods" means every kind of moveable property other than actionable claims and money, and includes stock and shares, growing crops grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

It is evident from the above that both the supply of electricity and meters is within the purview of the Act and, therefore, the Commission is not precluded from delving into matters pertaining to electrical meters in so far as they involve competition concerns.

With regard to the contentions in respect of Sections 60 and 66 of the Electricity Act, it may be noted that the Electricity Act specifically deals with the electricity industry and the matters connected therewith. Sections 60 and 66 of the Electricity Act confer on the appropriate authority powers to issue directions in case of anti-competitive practices and cast a duty to promote the development of the market in the electricity sector. Sections 60 and 66 of the Electricity Act read as under:

The Appropriate Commission may issue such directions as it considers appropriate to a licensee or a generating company if such licensee or generating company enters into any agreement or abuses its dominant position or enters into a combination which is likely to cause or causes an adverse effect on competition in electricity industry.

The Appropriate Commission shall endeavour to promote the development of a market (including trading) in power in such manner as may be specified and shall be guided by the National Electricity Policy referred to in Section 3 in this regard.

The above provisions authorize the sectoral authority to look into competition issues in the electricity sector unlike the Competition Act, 2002 which is an umbrella legislation and empowers the Commission to look into competition issues in any market and is not limited to a specific sector or industry. Hence, while in the electricity sector the Electricity Act may be a specific law so far as competition issues are concerned the Competition Act, 2002 is the specific law.

It is an established principle of statutory interpretation that generalia specialibus non derogant which means general provisions will not abrogate special provisions. Thus a specific law will supersede a general law. Accordingly in the present matter, the provisions of the Competition Act, 2002 will supersede the provisions of the Electricity Act.

Even if for the sake of argument, it is assumed that both legislations are special legislations for the purposes of the present matter then also as per the well known doctrine of Leges posteriores priores conterarias abrogant i.e. the later law abrogates the earlier contrary law, the provisions of the Competition Act, 2002 would prevail. The Hon'ble Supreme Court of India has laid down in no uncertain terms that in case both the Acts are special Acts, it is the later Act which must prevail. This principle has been upheld by the Hon'ble Supreme Court in several decisions including in the case of Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. and Ors. (2001) 3 SCC 71; Allahabad Bank v. Canara Bank 2000 (4) SCC 406; Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. 1993 (2) SCC 144; Sarwan Singh v. Kasturi Lal AIR 1977 (SC) 265 and Shri Ram Narain v. Simla Banking and Industrial Co. Limited AIR 1956 (SC) 614.

The Electricity Act, 2003 was notified in May 2003 and the provisions of the Competition Act, 2002 are being notified in phases since 2003. Section 60 of the Competition Act, 2002 which was notified and came into force on 19 June, 2003 reads as under:

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being force.

Further, it is also a settled rule of interpretation that if one construction leads to a conflict, whereas on another construction, two Acts can be harmoniously constructed then the latter must be adopted.

Section 62 of the Competition Act, 2002 and Section 175 of the Electricity Act lay down that the provisions of the Acts shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

As mentioned earlier in this Order, the Commission after considering the nature of the issues involved had sought the views of the DERC in this matter. It is pertinent to reiterate that the DERC in its response vide letter dated 30.09.2009 has clearly stated that 'Matters relating to electricity tariff have to be decided as per the provisions of the Electricity Act, 2003 and DERC Regulations. Accordingly, Competition Commission of India may not be appropriate forum to deal with such issues. Specific issues alluded to by the Petitioner accusing the DISCOMs of abuse of their dominant position may be looked into by the Competition Commission of India in terms of Competition Act, 2002.

In view of the above, the argument of the opposite parties that the Commission does not have jurisdiction in competition issues in the electricity sector merits rejection and for the aforesaid reasons I concur with the majority decision on Issue I. Hence, the same is decided in the affirmative.

Issue II: Whether the preliminary objections raised by the opposite parties should have been decided before further proceeding with the matter on merits.

The contention of the opposite parties is that the order dated 26.11.2009 directing DG to investigate was unsubstantiated and without justification and reasoning or basis and have argued that the preliminary objections raised by them should have been decided before further proceeding with the matter on merits.

The opposite parties have placed reliance on various judgments of the Hon'ble Supreme Court of India. On examining the facts and the ratio of the Hon'ble Supreme Court in these cases, it is found that they relate to different issues and are therefore, not relevant in the present matter. The case of Arun Agarwal v. Nagreeka Exports (P) Limited and Anr. : (2002)10 SCC 101, involved an objection regarding the jurisdiction of the High Court and it was held that the question of jurisdiction of the court should be decided as a preliminary issue and not at the time of hearing. However, the above case relates to Order XIV of the Code of Civil Procedure Code, 1908. The case cited by the opposite parties viz., K. Kamaraja Nadar v. Kunju Thevar and Ors. AIR 1958 SC 687, involved the issue as to whether the election tribunal and the High Court should have decided the preliminary objection before proceeding further in the election petition and the interpretation of Sections 82 and 117 of the Representation of the People Act, 1951. The third authority relied upon by the opposite parties i.e. Union of India v. Ranbir Singh Rathaur and Ors. (2006) 11 SCC 696, dealt with preliminary objection as regards the maintainability of the writ petition before the High Court. These cases involved the procedural law under a different statute and the interpretation of the provisions of the same. They are not applicable or relevant to the facts of the present matter or the interpretation of the procedure required to be adopted for forming an opinion under Section 26(1) of the Act.

Section 26(1) of the Act, inter alia, states that on receipt of information under Section 19 of the Act, if the Commission is of the opinion that there exists a prima facie case, it shall direct the DG to cause an investigation to be made into the matter. In this regard, the Hon'ble Supreme Court in the matter of Competition Commission of India v. Steel Authority of India Limited JT 2010 (10) SC 26, has observed:

...Keeping in mind the nature of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered view that the right of notice hearing is of not contemplated under the provisions of Section 26(1) of the Act.... No inquiry commences prior to the direction issued to the Director General for conducting the investigation. Therefore, even from the practical point of view, it will be required that undue time is not spent at the preliminary stage of formation of prima facie opinion and the matters are dealt with effectively and expeditiously.

At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as afore-referred.

Thus, in view of the above decision of the' Hon'ble Supreme Court, the relevant provisions of the Act and on the facts and circumstances of the case, the Commission was not required to hear the parties before deciding whether there exists a prima facie case or to decide the jurisdiction of the Commission at that stage. Moreover, none of the parties had raised this issue before the Commission at that stage. On the contrary, even the sectoral regulatory authority i.e. DERC has opined that CCI has jurisdiction to entertain the matter. Therefore, the argument of the opposite parties that the preliminary objections raised by them should have been decided before proceeding with the matter on merits cannot be accepted and the same is rejected. Accordingly, Issue II is decided in the negative.

Issue III: Whether the opposite parties have violated the provisions of Section 3 of the Act.

Section 3 of the Act prohibits an enterprise from entering into any agreement which causes or is likely to cause an appreciable adverse effect on competition in India and renders any such agreement void. As per Section 3(3) of the Act, any agreement between or practice carried on/ decision taken by enterprises engaged in identical or similar trade of goods or provision of services, which inter alia (a) directly or indirectly determines purchase or sale prices or (b) limits or controls production, supply, markets, technical development, investment or provision of services shall be presumed to have an appreciable adverse effect on competition. The scope of the term 'agreement' mentioned in Section 3 of the Act as defined in Section 2 (b) of the Act includes any arrangement or understanding or action in concert whether or not, such arrangement, understanding or action is formal or in writing or intended to be enforceable by legal proceedings.

With respect to the allegations of contravention of Section 3 of the Act, the DG has found that no evidence of any agreement or action in concert has been furnished to establish that the opposite parties based upon their understandings or through an agreement and independent of any regulatory mechanism have indulged in the acts covered in Section 3 of the Act. Further, from the inquiry conducted by the DG, no evidence could be found to establish contravention of the provisions of the said section. Hence, the DG has concluded in the report that the material and evidence available on record in the present matter is not sufficient to establish contravention of the provisions of Section 3 of the Act.., Accordingly, these allegations remain unsubstantiated.

The Commission has considered the entire material and evidence on record and in the absence of any cogent evidence either to show that the opposite parties entered into an agreement with each other and functioned as a cartel or to show that the practice carried on or decisions taken by them, were made jointly, i do not find any reason to disagree with the conclusion of the DG on this issue. I therefore concur with the majority decision on this and the findings of the majority. The issue stands disposed off accordingly.

Issue IV: Whether the opposite parties have abused their dominant position in violation of the provisions of Section 4 of the Act.

For properly adjudicating this issue, I would like to frame the following sub-issues:

i. What are the relevant market(s) in the present matter and whether the opposite parties are in a dominant position in such market(s). If so, in what manner; ii. Whether the opposite parties have imposed unfair conditions and hindered with the consumers' option to procure a meter of their own choice. If so, whether this amounts to an infringement Section 4(2)(a)(i) of the Act;

iii. Whether the opposite parties have created entry barriers for the distribution/ supply of meters denying market access in the relevant market of meters in contravention of the provisions of Section 4(2) (c) of the Act; and

iv. Whether the allegation that the opposite parties are abusing their dominant position by imposing unfair and discriminatory conditions in purchase of electricity through allegedly fast running meters is established.

(i) What are the relevant market(s) in the present matter and whether the opposite parties are in a dominant position in such market(s). If so, in what manner.

100.1 Section 2(r) of the Act defines 'relevant market' as the market which may be determined by the commission with reference to the 'relevant product market' or the 'relevant geographic market' or both. The relevant geographic market as defined under Section 2(s) of the Act comprises of the area in which the conditions of competition for supply provision of goods and services or demand thereof are distinctly homogenous and can be distinguished from the conditions prevailing in the neighboring areas. Section 2(t) of the Act defines a relevant product market as a market comprising of all those products or services which are regarded as interchangeable or substitutable by the consumer. The relevant geographic market and the relevant product market which may be delineated with regard to the all or any of the factors in Section 19(6) and 19(7) of the Act respectively.

100.2 All three opposite parties are distribution companies inter alia engaged in the business of distribution and supply of electricity to consumers. It is evident that the electricity as on date is not substitutable or interchangeable with any other product and is to that extent remains unique. Therefore, one of the relevant product markets of the three opposite parties in the present matter is the market of "distribution/ supply of electricity". The above proposition has also been admitted by all three opposite parties in their respective submissions.

100.3 The opposite parties have been allotted specific and exclusive areas of Delhi for distribution and supply of power post privatization of Delhi Vidyut Board (DVB). Therefore, the relevant geographic markets of the individual opposite parties in the present matter comprises of the geographical area as licensed to them for supplying electricity. The opposite parties enjoy virtually 100% market share in their respective areas and have no competitors for the supply of electricity in these areas. Accordingly, the opposite parties are in a dominant position in their respective relevant markets of distribution/ supply of electricity. In this respect, I agree with the Majority Order.

100.4 In the report of the DG, three separate relevant markets have been defined viz., the relevant market in relation to distribution and supply of electricity, the relevant market relating to the meters and the relevant market relating to the billing. The opposite parties have contended that there is a contradiction between the Commission's findings and the definitions of the relevant markets in the report of the DG. In my view, the arguments put forth by the opposite parties in this regard draw strength from the letter and not the spirit of the documents and are liable to be rejected. The opposite parties have also argued that they are in the business of distribution and retail supply of electricity and not in the manufacturing of meters. It is pertinent to note that there is a difference between the markets of 'manufacturing of meters' and the 'distribution/ supply of meter and these constitute two separate and different markets. Not being present in one market relating to meters viz., 'manufacturing of meters' does not necessarily mean that the opposite parties cannot be present or do not operate in any other market relating to meters including the market of 'distribution/ supply of meters'. Therefore, the contention of the opposite parties in this regard is also devoid of any merit.

100.5 Pursuant to the policy decisions, various regulations and guidelines, BIS standards etc. electricity in the relevant geographic markets can be supplied to consumers by means of only a particular type of meter which as per the prescribed specifications and BIS standards (Consumer Meter). The Consumer Meters (of BIS standard) supplied by different players are interchangeable and substitutable. There are many suppliers of such Consumer Meters in the relevant geographic market. It is pertinent to note that the nature of and conditions prevalent in the market of 'manufacturing Consumer Meters' and the market of 'distribution/ supply of Consumer Meters' are significantly different and resultantly these markets constitute two separate and distinct markets altogether. Even if the opposite parties are not operational in the market of manufacturing Consumer Meters as contended by them, they are in fact actively engaged in the business of distribution/ supply of the Consumer Meters to the consumers. Thus the opposite parties are present in the market of distribution/ supply of Consumer Meters. Therefore, there are two relevant markets in the present matter viz., that the relevant market of distribution/ supply of electricity and the relevant market of distribution/ supply of Consumer Meters.

100.6 While it has been established that the three opposite parties are in a dominant position in one of the relevant markets viz, the market of distribution/ supply of electricity, from the findings of the DG, it is also established that the opposite parties are the predominant suppliers of the Consumer Meters to their respective consumers and enjoy a position of strength in the second relevant market i.e. distribution/supply of Consumer Meters.

100.7 The statistics in Table 1 as referred to in the report of the DG, clearly indicate that in the relevant market of distribution/ supply of Consumer Meters, the opposite parties in their respective licensed areas have almost a 100% market share.

TABLE 1

S. No.

Name of opposite parties

Total No. of consumers

No. of consumers who purchased meters from vendors

1

NDPL [OP No. 1]

11lakh

1

2

BRPL [OP No. 2]

16lakh

49

3

BYPL [OP No. 3]

15lakh

68

100.8 It is apparent from the above table that the number of consumers who purchased meters directly from the vendors are negligible. It is significant to note that even the few consumers who procured the meters on their own purchased these meters from the vendors approved by the opposite parties.

100.9 Further, the results of the survey conducted by the DG's office through Forward Marketing Research and Consultancy Services, listed in Table 2, indicate that 100% i.e. all the consumers in the survey had procured the meters only from their respective distribution company namely the opposite parties.

TABLE 2

INSTALLATION OF METER WHILE GETTING CONNECTION (%)

S. No.

Name of opposite parties

Purchased by Self

By Company

1

NDPL [OP No. 1]

0

100

2

BRPL [OP No. 2]

0

100

3

BYPL [OP No. 3]

0

100

100.10 On considering the guiding factors under Section 19(4) of the Act, it is found that the opposite parties enjoy a dominant position in the relevant market of distribution/ supply of Consumer meters. The DG in his report has discussed in detail about the applicability of the factors under Section 19(4) of the Act, hence, agreeing with the view of the DG, and for the sake of brevity, I do not wish to restate the same in detail.

100.11 In view of the above statistics and other material on record, it is found that all three opposite parties enjoy a dominant position in their respective licensed areas in not only the relevant market of distribution/ supply of electricity but also in the relevant market of distribution/ supply of Consumer Meters.

100.12 I may mention that as per the majority view, there is only one relevant market i.e. the market of distribution/ supply of electricity in the present case and the relevant market of distribution/ supply of Consumer Meters has not been dealt with in the Majority Order. The majority has, therefore, not dealt with the issue of whether the opposite parties are in a dominant position in the market of distribution/ supply of Consumer Meters and further as to whether such dominance has been abused.

100.13 In her separate order, Member, Dr. Geeta Gouri has analyzed and dealt with the issue of the second relevant market of distribution/ supply of meters. In her order the relevant discussion of the dominance of the opposite parties in the meter market finds place in para Nos. 7-11. These paras are reproduced below:

As observed in the Majority Order, dominance of the DISCOMs in the distribution and retail supply of electricity is statutorily established. In the market for meters, purchases of meters by DISCOMs are all-India. This market is competitive as there are about 200 meter manufacturers in the country. No facts and evidences are bought on record in the DG's report to demonstrate that the DISCOMs in Delhi account for a large share of the country-wide sale of meter manufacturers to establish their dominant position

DISCOMs procure and install meters for the consumers for an empanelled list of manufacturers/ vendors. Consumers can purchase directly from this empanelled list or from the DISCOMs. Dominance of DISCOMs in the matter market is attributed to the restricted purchases of BIS meter from the panel.

As per the evidences gathered by the DG, the DISCOMs at present supply the BIS approved meters to consumers. In NDPL 1 customer out of the customer base of 11 lakh, 49 in case of BR PL out of customer base of 16 lakh and 08 customers in case of BYPL out of customer base of 15 lakh consumers have procured meters outside the Discom but from the approved vendors of manufactures empanelled by them. In terms of market share, the Disocms enjoy near monopoly in the supply of BIS approved meters to the final consumers.

The DG report avers that the low level of awareness of end consumers as regards Regulation 35 have enabled the DISCOMs to operate independently of market forces.

Based on the above analysis, it can be stated that the DISCOMs enjoy a dominant position in the market of supply BIS approved meters to the end consumers in Delhi.

100.14 As per the above, it is found by Member, Dr. Geeta Gouri that the opposite parties are in a dominant position in the relevant market of distribution/ supply of Consumer Meters. I fully concur with these observations and findings. However, the learned Member has proceeded to observe that the absence of information as regards the consumer choice cannot be categorized as abuse of dominance. The order also includes an analysis as to whether the consumers would be inclined to exercise the choice, if available, in purchase of meters. With great respect, I beg to differ from the observations and the finding of the learned Member on the issue of abuse of dominance.

For the purposes of Section 4 of the Act, after it is determined that an enterprise is enjoying a dominant position in the relevant market it must be examined whether the conduct of such enterprise falls within the ambit of the abusive conduct in terms of Section 4(2) of the Act. It may also be noted that for proving a contravention under Section 4 of the Act, it is sufficient to establish that the conduct of a dominant enterprise is covered under any of the sub-clauses of Section 4(2) of the Act.

At the outset, to determine sub-issues (ii) and (iii), it is necessary to look at the legislative and regulatory framework for consumer meters stipulated by the concerned sectoral authorities in the relevant market.

102.1 As per the provisions of Section 53(c) read with Section 55(1) of the Electricity Act, there is a prohibition on the supply of electricity except by means of a system which conforms to the specifications as may be specified. Further, no licensee shall supply electricity except through the installation of a correct meter in accordance with regulations made in this behalf by the Central Electricity Authority (the CEA). It is also provided that a licensee may require the consumer to give him security for the price of a meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase a meter.

102.2 As per Regulation 17(ii) of the Delhi Electricity Regulatory Commission (Performance Standards - Metering & Billing) Regulations, 2002 (the DERC Regulations 2002) in case of new connection/ replacement of meter, the consumer, may himself procure the meter either from the vendors certified by the licensee, or conforming to licensee's technical specifications. The licensee shall calibrate such meter at consumer's cost and seal the meter. Alternatively, consumer may choose to pay the full cost of the meter provided by the licensee. No meter rent shall be chargeable in such cases.

102.3 Under the CEA (Installation and Operation of Meters) Regulations, 2006 (the CEA Regulations) the consumers have the option to procure meters as specified therein and as per the BIS specifications. To facilitate the same, licensees are required to provide a list of makes and models of the meters as per Regulation 6(2)(c) of the CEA Regulations.

102.4 The DERC Regulations 2002 were repealed and replaced by the DERC Supply Code and Performance Standards Regulations, 2007 (the DERC Regulations 2007). Regulation 35 of the DERC Regulations 2007 states:

(ii) ... The consumer, if so desired, may procure meter conforming to the regulations issued by the Authority under Section 55 of the Act and the Licensee shall test, install and seal the meter.

Provided that, if any consumer elects to provide his own meter at any stage, the same shall be procured by Licensee at consumer's cost or the consumer may purchase on his own. Meter purchased by the consumer or on consumer's behalf, shall be tested, installed and sealed by the Licensee. The said meter will, however, have to be consistent with the CEA Regulations published under Section 55 of the Act and should have all additional features approved by the Commission. The features approved by the Commission shall be posted on the website of the Licensees....

102.5 Thus as per the above Regulation, the consumer may procure a meter conforming to the regulations, consistent with the CEA Regulations with all additional features approved by the DERC. The regulations also provide that if any consumer elects to provide his own meter at any stage, the same shall be procured by the licensee at consumer's cost or the consumer may purchase on his own. Further, under the DERC Regulations 2007, the licensees are obliged to post on their website the features approved by the relevant authority.

102.6 It is important to note that one of the major differences between the DERC Regulations 2002 and DERC Regulations 2007 is that the new DERC regulations do not restrict the customers' choice in meters to only the licensee i.e. the opposite parties or the vendors approved by them.

Thus, it is manifest that the new regulations viz., the DERC Regulations 2007 with respect to the choice of meters reinforce the importance of consumers' choice and categorically state that consumers may procure Consumer Meters of their own choice.

It is found that the various regulations and guidelines in essence provide the consumers with an option to procure Consumer Meters and to facilitate this choice, the said regulations and guidelines require the opposite parties to provide a list of makes and models of the Consumer Meters. Further, the regulations cast an obligation on the opposite parties to post on their website the features approved by the concerned authority. The acts omissions and conduct of the opposite parties need to be looked into in order to determine whether they have hindered with the consumers' option to procure a Consumer Meter of their own choice. The same has to be scrutinized in view of the aforementioned existing legal framework and rules etc.

(ii) Whether the opposite parties have imposed unfair conditions and hindered with the consumers' option to procure a meter of their own choice and if so, whether this amounts to an infringement Section 4(2)(a)(i) of the Act;

The conduct of the opposite party No. 1/ NDPL with respect to the choice of Consumer Meters as gathered from the report of the DG and the other material on record, is analyzed below:

105.1 As per the report of the DG, when the proceedings in this case began, the website of the opposite party No. 1 under the caption 'Install Your Own Meter' provided as below:

As per Regulation 17(ii) of the Performance Standard Regulations - Metering & Billing (August 2002), issued by DERC, a consumer may himself procure the meter from the vendors certified by the licensee & conforming to licensee's technical specifications as given below:

erated Energy Meters

Technical Specification

105.2 It is noted that the information regarding the DERC Regulations 2002 was posted on its website by the opposite party No. 1 even though said regulations had already been repealed and were no longer applicable at that time. In fact as stated earlier, one of the major differences between the DERC Regulations 2002 and the DERC Regulations 2007 was that the latter did not restrict the customers' choice in meters to only the licensee or the vendors approved by them. Further, neither a list of approved manufacturers/ vendors of meters nor technical specifications of the meters as per the DERC Regulations 2002 was posted on the site. During the course of the proceedings, the information under the caption install Your Own Meter' was amended and read as below:

As per the applicable Laws, Regulations in force currently, a consumer may himself procure the meter from the vendors certified by the licensee & conforming to license's technical specifications

105.3 This is significant to mention that a list of only those vendors who were approved by the opposite party No. 1 was uploaded on the amended website. It is noted that the amended information merely removed the reference to the repealed regulations by replacing the same with the words 'applicable laws'. However, the details on the site continued to communicate that the choice of meter for the consumer was limited to the vendors certified by the opposite party No. 1. The versions of the website referred to above are annexed to in the report of the DG as Exhibits 3, 4 and 5.

105.4 On going through these Exhibits, it is seen that the opposite party No. 1 placed a list of only five vendors and five dealers of the listed vendors on their site. On examination of the websites placed on record by the DG (Exhibits 3, 4 and 5 of the report of the DG), it is evident that the opposite party No. 1 had posted outdated information on its website in relation to the choice available to consumers with respect to procuring/ purchasing meters. In the course of investigation by the DG, the information provided on the opposite party No. 1's site was amended and list of certified vendors was also uploaded. However, the revised website provided information which indicated that the consumer's option was restricted to only those vendors of Consumer Meters who had been empanelled and approved by the opposite party.

105.5 Further, during the investigation by the DG, it was found that the opposite party No. 1 through its helpline communicated to a prospective applicant for new connection that only NDPL i.e. opposite party No. 1 provides meters for new connections and there is no procedure laid down for the consumers who want to purchase meters on their own. It was further communicated to the prospective applicant that there is no list of vendors for this purpose and meters purchased by consumers on their own are not acceptable to the opposite party No. 1 for providing new connections.

From the above, it is evident that in reality, the choice of Consumer Meters for the consumers of the opposite party No. 1 was limited to the Consumer Meters of vendors approved by the opposite party No. 1.

After analyzing the conduct of opposite party No. 1 above, the conduct of the opposite party Nos. 2 & 3 viz., BYPL and BRPL with respect to the choice of Consumer Meters as gathered from the report of the DG and the martial on record is analyzed below:

107.1 The opposite parties Nos. 2 & 3 have a common website and provided information on the process of replacement of old, faulty, defective, inaccurate and incorrect range meters under the caption 'Meter replacement' on their website. Under this heading, it is also mentioned that a consumer can opt to install his own procured meter of BSES specifications and approved make. While the relevant electricity laws and regulations provide that a consumer may install any meter of BIS approved standard and specifications, the information supplied by opposite parties No. 2 and 3 on their website creates an impression that a consumer who opts to install his own meter may procure the same only from the vendors approved by the opposite parties Nos. 2 and 3. As per the DG report, the opposite parties Nos. 2 and 3 provided a list of only four vendors and seven dealers of the listed vendors on their website. As per the report of the DG, there was no information available on website to the effect that consumers can purchase Consumer Meters from any other vendor, if they so choose. It may be noted that the opposite parties Nos. 2 and 3, by placing incomplete information on their website have, in effect, restricted the choice of the consumers to only the vendors approved by the opposite parties Nos. 2 and 3.

The opposite party No. 1 has submitted that it has taken and continues to take certain initiatives towards enhancing consumer awareness regarding their right to procure their own Consumer Meters according to prescribed standards and specifications. The opposite party No. 1 has listed the different methods adopted in this regard including posting The information on their website, displaying printed posters at all consumer care centers, distributing pamphlets, broadcasting of radio jingles and newspaper advertisements. However, no sample pamphlet or details of the other initiatives as claimed to be undertaken has been provided by the opposite party No. 1 to the DG or the Commission. Thus, the opposite party No. 1 has not corroborated its submission with any evidence or material. Therefore the above claim of the opposite party No. 1 does not have any merit and for want of any cooperative material this claim remains unsubstantiated and hence the same cannot be accepted.

Further, the results of the survey conducted by the DG office through Forward Marketing Research and Consultancy Services, listed in Table 3 below, indicate that not more than 20% of the consumers are even aware that they can also purchase the Consumer Meters form independent vendors other than the opposite parties.

TABLE 3

Awareness regarding purchase of meter from independent company (%) 1

S. No.

Name of opposite parties

Yes

No

1

NDPL[OP No. 1]

20

80

2

BRPL [OP No. 2]

22

78

3

BYPL [OP No. 3]

15

85

It may be noted that the three opposite parties had no lawful authority or power to select or to prepare a panel of the suppliers/ distributors of Consumer Meters for the consumers and by doing so they assumed and are exercising control in the relevant market relating to distribution /supply of Consumer Meters.

As per Section 4(2)(a)(i) of the Act, there shall be an abuse of dominant position if, an enterprise inter alia, imposes unfair condition in purchase or sale of goods or services. Fairness requires transparency. A willful or deliberate omission would be considered unfair. The requirement of communicating the complete information as mandated by the statutes in the interest of the consumers' was not complied with by the opposite parties. Not furnishing such information or miscommunication of the same adversely affects the interests of the consumer.

The Act does not define the term 'unfair' and whether a particular condition is unfair would be determined on the basis of the facts and circumstances of each case. The courts have also interpreted this term differently in different cases.

In a matter relating to an unfair trade practice in the context of the Monopolies and Restrictive Trade Practices Act, 1969, the Hon'ble Supreme Court in the case of H. M. M. Limited v. Director General, Monopolies and Restrictive Trade Practices Commission Civil Appeal No. 2939 of 1989, 11 August 1998) observed that for holding a trade practice to be unfair, it must be found that it causes loss or injury to the consumer.

1114. The Supreme Austrian Federal Court while deciding the matter of R. v. Re A Loyalty Bonus Scheme (2001) E.C.C. 19, involving loyalty bonuses and exclusive supply requirements imposed on its customers by an undertaking which dominates a market, observed:

Usual methods of competition are permitted and will only become unfair if there are particular circumstances which make competition to provide services obstructive. This is the case if a particular action which may be accounted competition to provide services becomes an obstructive measure directly aimed against the competitor and hindering (If not actually preventing) in offering its services in an appropriate manner in the market, thereby ruling out genuine comparison of services in the future.

The Supreme Austrian Federal Court in this case also observed that practices that are not the result of commercial performance, but aim to prevent or hinder the purchaser's choosing between several sources of supply, and to deny other manufacturers access to the market cannot be reconciled with the aim of fair competition in the Common Market.

1116. The Swiss Federal Court in the case of Chanel S.A. Genève of Geneva and Chanel S.A. of Glaris v. EPA AG (1997) E.T.M.R. 352 observed:

Taking a functional approach, in making a distinction between fair and unfair competition one must take into account the results which one has a right to expect where an example of fair competition is functioning smoothly. Therefore, competition becomes dishonest where it threatens such use inasmuch as or where it thwarts the expected results.

It may be observed that in restraining the consumers from exercising their full choice or freedom to procure the meters, they were deprived of their right to choose Consumer Meters of their own choice as guaranteed under the aforementioned regulations. The allegation that the opposite parties benefited by installing Consumer Meters of the suppliers approved by them which were alleged to be running faster may also be noted. Not only this, the opposite parties by compelling the consumers to procure Consumer Meters only through them or through the vendors certified by them adversely affected their interest. Therefore, the conduct of the opposite parties restricting the consumers' choice to the meters supplied by the opposite parties and the vendors approved by them was against the interest of the consumers and had the effect of depriving them of the benefits of a competitive meter market. Hence, the actions of the opposite parties amount to imposing an unfair condition on consumers purchasing electricity and Consumer Meters.

Competition Law and consumer protection interface has been constantly emphasized and needs no further elaboration. Consumer welfare is an explicitly-stated goal of competition law in India. The preamble of the Act states that it has been enacted inter alia to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India. These objectives are further reflected in the various provisions of the Act including Section 18 of the Act wherein the objectives in the preamble to protect consumer interests are reinforced. The Hon'ble Supreme Court of India has in the Steel Authority of India case (cited supra), observed as under:

... [T]he Act requires not only protection of trade but also protection of consumer interest.

A healthy and a competitive economy is imperative to safeguard consumer interests. Among others free choice, price and quality are central to the consumer interest. A market is said to be competitive if consumers can choose between a range of substitutable products and suppliers face no obstacles to supply products or services. The choice available to the consumers must necessarily be a real and genuine choice and not a notional one. Further in the present case, the consumer also has a right under the sectoral Jaws to be informed about the makes and models of Consumer Meters. Depriving the consumers of making an informed choice or misguiding them to make an ill-informed decision jeopardizes the interest of the consumers.

The hypothesis that a consumer may prefer to procure Consumer Meters from the opposite parties over other suppliers despite having complete and correct information is not sufficient to exempt the opposite parties from their legal obligation of disclosing the correct information. The analysis of the apparent benefits of procuring a Consumer Meter from the opposite parties does not take into account the fact that the right may be better exercised in a competitive market where the Consumer Meters would be available at competitive prices and benefits. Even assuming that a fully aware consumer also would prefer to procure the Consumer Meter from the opposite parties would not absolve the opposite parties from the accountability of having posted incorrect information and the consequent contravention of the Act.

Accordingly, it is found that the opposite parties have through their actions hindered with the consumers' option to procure a meter of their own choice and thereby imposed unfair conditions on consumers purchasing electricity and Consumer Meters. Thus, the conduct of the opposite parties of depriving the consumers of their rightful option and the consequently imposing an unfair condition on the sale and purchase of electricity and Consumer Meters as detailed above clearly fits within Section 4(2)(a)(i) of the Act.

(iii) Whether the opposite parties have created entry barriers for the distribution/ supply of meters denying market access in the relevant market of Consumer Meters in contravention of the provisions of Section 4(2) (c) of the Act.

For the purposes of Section 4 of the Act 'dominant position' means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to - (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour (Explanation to Section 4 of the Act). The opposite parties are regulating the supply of Consumer Meters not only by selecting a panel of suppliers of meters but also by directing the consumers either to take the meters from the opposite parties or from the vendors certified by them. Thus the opposite parties have full and effective control of the supply of the Consumer Meters with in the respective licensed areas. It is also observed that all three opposite parties enjoy almost 100% market share in the relevant market of distribution/ supply of Consumer Meters in their respective licensed areas. There is no doubt that the opposite parties are in a dominant position not only in the relevant market of distribution/supply of electricity but also in the relevant market of distribution/ supply of Consumer meters.

While Section 4 of the Act does not prohibit an enterprise from holding a dominant position in a market, it does place a special responsibility on such enterprises, in requiring them not to abuse their dominant position. As per Section 4(2) of the Act, there shall be an abuse of dominant position, if an enterprise inter alia directly or indirectly, imposes unfair or discriminatory conditions in purchase or sale of goods or services or indulges in practice or practices resulting in denial of market access in any manner. However, the said section does not contain an exhaustive list of the activities that would amount to a contravention of its provisions. The actions, practices and conduct of an enterprise in a dominant position have to be examined in view of the facts and circumstances of each case to determine whether or not the same constitutes an abuse of dominance in terms of Section 4 of the Act. In this regard, it is relevant to quote the decision in the case of Kanal Ltd. v. Föreningen Svedska Tonsättares Internationella Musikbyrå (2009) 5 C.M.L.R. 18, where the Court (Fourth Chamber) observed that an undertaking in a dominant position is entitled also to pursue its own interests. However, such an undertaking engages in abusive conduct when it makes use of the opportunities arising out of its dominant position in such a way as to reap trading benefits which it would not have reaped if there had been normal and sufficiently effective competition. This proposition of law was also noted in United Brands Company & United Brands Continental b. V. v. Commission of the European Communities 1978 E.C.R. 207.

As per Section 4(2)(c) of the Act, there shall be an abuse of dominant position if any enterprise indulges in a practice resulting in denial of market access in any manner. The Hon'ble Supreme Court interpreted the term 'any' in Lucknow Development Authority v. M.K. Gupta AIR 1994 SC 787:

In Black's Law Dictionary the word 'any' has been explained as having a 'diversity of meaning' and may be "employed to indicate all and every as well as some or one and its meaning in a given statute depends upon the context and subject matter of statute.

'Any' is a word of wide meaning and prima facie excludes limitation or qualification Yashwant Stones v. State of Uttar Pradesh AIR 1988 ALL 121. Accordingly, the provisions of Section 4(2)(c) of the Act have a very wide context and the use of words 'any manner' brings within its scope 'all' or 'every' manner which results in denying access to a market.

Therefore, the text of Section 4(2)(c) of the Act is far reaching and does not limit or list the ways in which a market access may be denied. For the purposes of this section, the conduct of a party would be tested on the basis of the end effect i.e. whether access to a market has been denied and not. In other words, the same conduct by different parties may attract provisions of Section 4(2)(c) of the Act depending on whether the conduct of the parties results into denial of market access in any manner.

Owing to the conduct of the opposite parties of limiting the choice of Consumer Meters to the meters supplied by the opposite parties or the vendors approved by them not only hindered the choice of the consumers but also restricted market access to the other distributors/ suppliers of the Consumer Meters in the relevant market of distribution/ supply of Consumer Meters

The conduct of the opposite parties of publishing a list of only the approved vendors on the websites and misguiding the consumers that the meters may be procured either from the opposite parties or their approved vendors has already been discussed in detail.

As mentioned earlier, Section 55 of Electricity Act read with Regulation 6 of CEA Regulations prescribe that if any consumer elects to purchase a meter, the same may be purchased by him stipulating only that the meters shall bear BIS mark, meet the requirements of the CEA regulations and have additional features as approved by the appropriate authority. It is noted from the report of the DG that as on 10.02.2010 there were ten manufacturers in Delhi and eighty two all over India including some foreign firms as per the BIS website. However, the opposite party No. 1 placed a list of only five vendors and five dealers of the listed vendors on their site and the opposite parties Nos. 2 and 3 provided a list of only four vendors and seven dealers of the listed vendors. It has already been discussed above how the opposite parties informed their respective consumers that the choice of Consumer Meters was restricted to the vendors of meters approved by the opposite parties.

The above analysis indicates that there is asymmetry of information which has led to the creation of entry barriers in the market of distribution/ supply of Consumer Meters. The fact that the entry into the meter market was restricted owing to the opposite parties' actions is also corroborated by the statements of the one of vendors of Consumer Meters in Delhi viz., Bentex Control and Switchgear and Company as recorded by the DG in the course of the investigation. The statement of a representative namely Amit Yadav has been recorded by the DG who has stated that there is no competition in the meter market in Delhi and since his firm is not approved by the opposite parties, it cannot supply meters to the consumers of the opposite parties. This evidence illustrates the entry barrier created by the opposite parties in the relevant meter market.

Empanelment of meter vendors by the opposite parties had the effect of denying access to the other dealer/ vendors/ distributors of Consumer Meters. In this regard, it may be noted that the quantum of damage is not relevant. It is sufficient that the legal right of consumers as well as vendors of Consumer Meters has been violated. The opposite parties through their conduct restricted the entry of eligible distributors and suppliers of Consumer Meters to the relevant market of meters. Consequently, competition in this market has been hindered and foreclosed.

The opposite parties which are dominant in the relevant market of distribution/ supply of Consumer meters through their conduct have allowed market access to only such vendors of Consumer Meters who were approved by them and denied the access to the other vendor/ suppliers. It is evident from the above discussion that the entry of players in the meter market in their respective areas of operations of the opposite parties has been restricted by them through their acts and conduct. Accordingly, it is found that the opposite parties have abused their respective dominant positions and are in contravention of Section 4(2)(c) of the Act.

(iv) Whether the allegation that the opposite parties are abusing their dominant position by imposing unfair and discriminatory conditions in purchase of electricity through allegedly fast running meters is established.

The informant has also alleged that the meters provided by the opposite parties record higher readings than the actual consumption by the consumers. Hence, the issue that the opposite parties are abusing their dominant position by imposing unfair and discriminatory conditions in purchase of electricity through allegedly fast running meters is to be examined separately.

It has been established that the opposite parties have hindered with the consumers' option to procure a meter of their own choice. The DG, in the course of investigation, has also found that there is substance in the allegations that the meters provided by the opposite parties do not give the correct measurement of electricity. In this regard, the DG has relied on the reports in the press relating to claims that the meters were moving fast and the report of the testing drive undertaken by the PGC through the CPRI.

According to the applicable specifications published by the BIS, the permissible error limit under on-site conditions for Class 1.0 meters is ± 2.5%. Further, as per the report of the DG the opposite parties have also submitted that the permissible error margins of ± 2.5% is the standard as provided by BIS and the same will have to be applied in order to check whether an electronic meter is defective or not. It is also noted that the PGC in its submissions to the DG office stated that for onsite conditions the maximum permissible error margin is ± 2.5%.

It is gathered that to ascertain the accuracy of consumer meters, the CPRI under the aegis of the PGC carried out tests of such meters in Delhi on receipt of complaints filed by the consumers. The results of the above test as obtained and reproduced by the DG in the report state that out of the 2014 meters tested 1847 meters i.e. 91.7% showed a positive error and only 167 meters i.e. 8.3% showed a negative error. Further, it is also noted that about 86 meters have tested with a positive error of more than 3%. It is also significant to note that the Committee Constituted by Ministry of Power Regarding Permissible Accuracy Limits of Electricity Meters in its report dated September 2008 cited the results provided by the CEA in this regard. The CEA had collected information about the tests conducted at site by the utilities since 2007 and the test results of 244305 consumer meters show that about 74% meters showed an error on the positive side.

Since 91.7% of the meters tested by the PGC showed an error on the positive side, the DG concluded that the results reflect a skewed pattern which does not support the principles of normal distribution curve. Based on the above, the DG has observed that the fastness of the meters may be related to the fact that the opposite parties supply the said meters and also questioned the intention of the opposite parties in dealing with only certain vendors to procure the Consumer Meters.

The opposite parties have submitted that the 2041 meters tested by the PGC represent less than 0.1% of approximately thirty lakh consumer meters installed by the opposite parties. The opposite party No. 2 has further submitted that CPRI tested more than six lakh meters for opposite parties Nos. 2 and 3 and found them fit for installation. In support of this contention, the opposite party No. 2 has produced copies of the sample reports. Upon perusal of these sample reports, it is found that for a lot of twenty thousand meters, the CPRI inspected only thirty two meters as a representative sample. Extending the above logic, it seems that the CPRI inspected only 1056 (approx) as representative meters in the 33 lots inspected by the CPRI and not all the 655,544 meters as argued by the opposite party No. 2. It appears that the representative sample of 2014 tested by the PGC is larger than the representative sample inspected by CPRI. Further, it seems that CPRI conducted the tests of the six lakh meters of the opposite parties Nos. 2 and 3 at the instance of its client BSES viz., opposite parties Nos. 2 and 3. Hence, the findings in CPRI's report also cannot be considered independent and impartial. For the reasons stated above, this argument of the opposite party No. 2 is not acceptable.

However, after perusing the material on record, it is found that the findings of the DG in relation to fastness of the meters are primarily based on tests of 2014 meters conducted by the PGC through the CPRI. This sample seems too small and consists of meters under complaint. Hence, the sample taken in the above test cannot be said to be a representative sample of all the consumer meters. It is found that the result of the PGC tests and the other material on record in this regard is not sufficient to conclude that the opposite parties have supplied faulty meters to the consumers. In the absence of sufficient and cogent evidence, it cannot be said that the opposite parties have abused their dominant position by imposing unfair and discriminatory conditions in purchase of electricity through fast running meters. I, therefore, concur with the majority view on this issue.

In conclusion, it is found that the all three opposite parties have abused their dominant position in the relevant market of distribution/ supply of electricity and the relevant market of distribution/ supply of Consumer Meters by imposing unfair conditions on purchase/ sale of electricity and Consumer Meters in contravention of Section 4(2)(a)(i) of the Act. It is also found that the opposite parties by their acts in the relevant market of supply/ distribution of Consumer Meters have denied access of this market to the other distributors/ vendors of the Consumer Meters and hence abused their dominant position in above said market in contravention of Section 4(2)(c) of the Act.

It may be noted that the neither the gain to the opposite parties is ascertainable nor has the damage to the consumers quantifiable on the basis of the available material on record. Therefore, considering the material on record and in view of the totality of the circumstances, it may not be appropriate to impose a penalty on the opposite parties in the present matter. The opposite parties cannot be allowed to continue to abuse their dominant position and harm the consumers' interest to gain undue profits or to deny the consumers the right to exercise his choice as conferred by the sectoral laws. Hence, it is necessary to issue the appropriate directions under Section 27 of the Act.

Accordingly, the opposite parties are hereby directed to:

a) comply with the sectoral laws and cease and desist from publishing incorrect or incomplete information or misleading the consumers in any manner with respect to the choice of meters available to the consumers;

b) cease and desist from anti-competitive practices of limiting the consumers' choice of meters to only the vendors of meters approved by the opposite and directly or indirectly restricting and/ or denying market access to the relevant market of distribution/ supply of Consumer Meters; and

c) publish complete and accurate information on their respective websites as required by the relevant laws and take necessary steps to make consumers aware of their right to procure a meter of their own choice.

Further, as observed earlier in this order, the conduct of the opposite parties amounting to abuse of their respective dominant positions in the two relevant markets resulted primarily from the non-compliance of the relevant sectoral rules and regulations, hence the concerned sectoral authority may look into this matter and take other necessary actions as it deems fit.