On 25th August, 2012, CUTS submitted its third Preliminary Information Report (PIR) before the Competition Commission of India against the global potash cartel operated by seven companies abroad having a detrimental impact on Indian imports of the mineral. The PIR is available at:
India and China are the biggest importers of potash with India being wholly reliant on imports to meet its needs for potassium, one of the key fertilisers for food production and is therefore severely impacted by the high prices of potash determined by the global cartel. A study by competition expert, Frederic Jenny estimates that assuming India imports an average of 6 million tonnes of potash per year during 2011-20, the significant overcharge it would end up paying on these imports would be financed to a large extent (50-100%) from a $1.5-billion ( 68,400 crore) annual subsidy granted by the government to the department of fertilisers. And while Indian negotiators have been requesting a 10% discount on spot prices, which are presently in the vicinity of US$ 500 per tonne, and have claimed in the past that if they cannot make a deal between $445 and $450 per tonne, they will investigate other options, Bill Doyle, CEO of Potash Corp. has reportedly said he doubted that there would be a long term boycott from India (given its reliance).
CUTS has requested the competition watchdog to undertake an investigation under Section 19 of the Competition Act for an act taking place outside India that has or is likely to have an appreciable adverse effect on competition in India vide Section 32 of the Competition Act (the “effects doctrine”) against the global potash cartel.
A case has been revived by a U.S. court in a ruling dated June 27, 2012 against the cartel which comprises seven companies, one of which being a U.S. based company. The United States operates explicit exemption for export cartels under the Webb Pomerene Act of 1918. India along with several other jurisdictions provides an implicit exemption. Nonetheless, the United States has decided to take further action through the extraterritorial reach of U.S. antitrust rules against the cartel based on a case filed by domestic potash buyers.
CCI is therefore requested to take suitable action under Section 32 of the Competition Act which empowers it to undertake investigation under Section 19 of the Competition Act on the domestic impact of the global potash cartel and its activities and pass such orders as it may deem fit within the provisions of the Act.