INDIA Law and Practice Contributed by: Anupam Varma, Poonam Verma Sengupta, Sakshi Kapoor and Rajesh Jha, JSA
2.4 Market Concentration Limits India does not prescribe a single fixed numerical percentage cap limiting any one entity’s control of electricity supply. Instead, market concentration is governed through a dual-layer legal architecture: a sector-specific regulator (CERC/SERCs) under the Electricity Act, and a cross-sectoral competition reg- ulator (CCI) under the Competition Act, 2002, both operating concurrently as confirmed by judicial prec- edent. Sector-Specific Law Section 60 of the Electricity Act empowers the appro- priate Commission to direct licensees in case of likely abuse of dominant position for inhibiting competition. The CERC (Power Market) Regulations, 2021 use the Herfindahl-Hirschman Index as the primary concen- tration metric: below 0.15 indicates an unconcentrated market, 0.15–0.25 indicates moderate concentration, and above 0.25 indicates high concentration. These are monitoring tools, not hard statutory caps. Cross-Sectoral Framework Section 4 of the Competition Act prohibits abuse of dominant position (being dominant is not prohibited; abusing dominance is). Sections 5 and 6 regulate combinations, with the 2023 amendment introducing a deal value threshold of INR2,000 crore. 2.5 Surveillance to Detect Anti-Competitive Behaviour Anti-competitive conduct in the electricity sector is principally governed by the Competition Act, 2002, which prohibits anti-competitive agreements (Sec- tion 3), prohibits abuse of dominant position (Section 4) and regulates combinations (Sections 5 and 6). In addition, Section 60 of the Electricity Act empowers the appropriate Commission to issue directions where the conduct of a licensee or generating company adversely affects competition. Regulatory Authorities The CCI is the primary enforcement authority. It may initiate inquiries suo motu or on receipt of information (Section 19 of the Competition Act), direct the Director General to investigate (Sections 26 and 41), and exer- cise powers to summon witnesses, require produc- tion of documents and, with judicial approval, conduct
search and seizure. CERC undertakes surveillance of the power markets (Section 60 of the Electricity Act). Enforcement and Penalties The CCI may issue cease-and-desist orders and impose financial penalties (Section 27 of the Compe- tition Act), grant interim relief (Section 33), and enforce settlement and commitment mechanisms (Sections 48A and 48B). Appeals lie to the NCLAT, with a further appeal to the Supreme Court. 3. Generation Facilities 3.1 Constructing and Operating Generation Facilities The principal legislation governing the construction and operation of generation facilities in India is the Electricity Act. Nuclear power generation is addi- tionally governed by the SHANTI Act. The regulatory framework is supplemented by regulations issued by CERC and the respective SERCs, technical standards prescribed by the CEA, and policies, guidelines and directions issued by the Central and State Govern- ments. The principal regulatory framework includes the following: • Technical standards : The CEA prescribes technical standards relating to the construction, operation, maintenance, connectivity and safety of generating stations and associated electrical infrastructure. • Grid Codes : The Indian Electricity Grid Code, 2023 and the applicable State Grid Codes prescribe the technical and commercial framework for schedul- ing, dispatch, grid security and operation of the power system. • Connectivity and transmission access : Connectivity to the ISTS is governed by the CERC (Connectiv- ity and General Network Access to the Inter-State Transmission System) Regulations, 2022. Con- nectivity to the intra-state transmission system is governed by the applicable SERC regulations and procedures issued by the relevant STUs. • Tariff regulation : Tariffs are regulated under the Electricity Act and the applicable tariff regulations issued by CERC and the respective SERCs. Tariffs are either determined by the appropriate Commis-
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