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13. It is further alleged that the present sampling procedure is a departure from the past practices regarding sampling of coal. It is stated that earlier i.e., before 2007, the samples were analysed both at the loading as well as unloading ends. There was a process of reconciliation of discrepancies by working out an average/ mean grade or quality. It is, however, alleged that CIL suo motu amended the said process in FSAs. It is alleged that at present the sampling is carried out in terms of the agreement at the loading end only within the colliery. This process is stated to be inadequate/ inefficient resulting in severe grade/ band slippage.

20. On analysis of the terms and conditions of FSA, the DG concluded that CIL and its subsidiaries had violated the provisions of Section 4(2)(a)(i) of the Act by imposing unfair or discriminatory conditions in the relevant market. The following terms and conditions were found by the DG to be unfair or discriminatory:

a) Sampling procedure for existing PSUs and other power producers are different, without any reason for such discrimination. The sampling procedure lacks obligation on the seller to incorporate fair and transparent procedure to match the Gross Calorific Value (GCV) pricing mechanism. The sampling and testing procedure in clause 5.7 (4.7 for old power producers) FSA were found to be unfair and discriminatory.

Sampling

81. The nub of the dispute between power producers and coal companies in the present batch of informations centres around the sampling procedure. It was submitted on behalf of power producers that prior to the present FSA, sampling was done at both the ends i.e. at loading and unloading points by an independent party. CIL, however, while drafting model FSA made changes in the sampling procedures.

82. No doubt, when the price of coal is based on the grade/ quality of coal, the buyer has the right to get the grade for which he is paying the price. Hence, the importance of terms and conditions relating to sampling and consequent assessment of grade and quality of coal hardly needs any reiteration.

133. Also, the Commission notes the changes effected by CIL during the course of the investigation and pendency of proceedings before the Commission in FSAs on certain aspects, as noted in the order. In fact, it appears that even during the pendency of appeal before the Hon'ble Competition Appellate Tribunal, CIL has taken steps to improve the process of sampling of coal. Prior to October 2013, FSAs for new and existing power plants provided for joint sampling and analysis at the loading end. Pursuant to modifications in the sampling procedure made in October 2013 i.e. before the passing of the order by the Commission, CIL appointed independent third parties through an open tendering procedure with a view to bring more transparency in the sampling process. Under this system, the samples were collected and analysed by an independent third party at the loading end, instead of joint sampling by seller and purchaser. In 2015, further modifications were made by CIL whereby both CIL and consumers appointed separate third parties for sampling and analysis. Both the third parties conducted the sampling (collection and analysis) jointly at the loading end. Final laboratory sample was to be divided into three parts: the first part was taken by the power company for analysis at their end; the second part was taken by the respective subsidiary of CIL for analysis; and the third part, which may be used as 'Reference Sample' in case of dispute and would be analysed at a mutually agreed NABL Accredited Laboratory, was jointly sealed and kept in the joint custody at the loading end. The results of the analysis of the referee sample were binding on both parties.