CCI Orders Probe Against RCF for Unfair Sale of Products with Urea in Maharashtra

The Competition Commission of India has ordered a probe against state-run Rashtriya Chemicals and Fertilizers for allegedly compelling dealers and farmers to buy other products along with urea in Maharashtra.

Acting on a complaint filed by an individual, the fair trade watchdog said the conduct of RCF appeared to contravene provisions of the Competition Act, including those relating to abuse of dominant position and anti-competitive agreements, according an order.

The Competition Commission of India (CCI) has directed its investigation arm, the Director General, to probe the matter and submit a report within 60 days. It was clarified by CCI that the observations were preliminary and would not prejudice the outcome of the investigation.

The complainant (individual) alleged that RCF, a 'Navratna' PSU and a leading fertiliser maker, was compelling dealers and farmers to buy non-subsidised products such as water-soluble fertilisers along with urea.

The CCI noted that urea's maximum retail price is government-fixed and heavily subsidised, making it an essential input for farmers.

The complainant submitted evidence including letters from government departments and dealers' associations, media reports, and video recordings showing forced sales. Despite repeated warnings from central and state authorities against the practice, complaints persisted across Maharashtra, the complainant said.

The competition watchdog noted that RCF accounted for over 42% of the urea supply in the state in 2023-24, far ahead of its nearest competitors. Given the regulated nature of urea distribution, farmers in Maharashtra were highly dependent on local manufacturers, it observed.

The Commission said that "RCF holds a position of dominance in the market for sale and supply of Urea in the State of Maharashtra and by tying the sale of other products with that of Urea, it appears that it has leveraged its position to enter into or to protect the market for other products".

Such leveraging by a dominant entity has been frowned upon under the scheme of the Act as it hinders fair competition in the market. In this context, the Commission is of the prima facie view that there appears to be a violation of Section 4(2)(e) of the Act, the regulator added.

RCF, under the Ministry of Chemicals and Fertilizers, operates units in Trombay and Thal in Maharashtra. It produces urea, complex fertilisers, micronutrients, and industrial chemicals.