The anti-trust watchdog said that corporations and some people found guilty of breaking the laws have been fined 5% of their average turnover/income. Although Indian railways manipulates the tender.
CCI’s Order
The CCI levied sanctions on entities that were seen to be actively involved with one another to negotiate proposals in various railway tenders, resulting in the manipulation of the Indian Railways’ bidding process.
The Competition Commission of India (CCI) today found seven companies guilty of bid rigging and cartelization under the Competition Act, 2002, after they participated in a tender called by the Indian Railways (the Act).
The CCI discovered that the seven companies were actively communicating with one another to discuss bids, resulting in the Indian Railways’ acquisition of polyacetal protective tubes being manipulated.
“…the modus operandi of collusion/coordination in the form of cartel pool amongst the OPs, which includes the allocation/allotment of tenders amongst the OPs, revision of sharing pattern, induction of new members to the pool, calculation methods to arrive at the price to be quoted, discussion on rates to be quoted, complaints regarding undercutting, and communication amongst OPs to withdraw offers,” according to the CCI.
As a result, it imposed penalties on the parties equal to 5% of their respective average annual revenue produced from the sale of protective tubes over the previous three financial years.
The CCI acted suo moto to address the issue of probable cartelization among Indian Railways tender bidding competitors.
All seven enterprises were discovered to be engaged in the manufacture and supply of protective tubes, according to the investigative report presented by the Director-General of the CCI.
Three of the seven organizations were sister concerns, according to the study, and had even submitted for the tender from the same IP address.
Bid-rigging is defined as an act in which enterprises engaged in an identical or similar production, trading, or provision of services come to an agreement “that has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the bidding process,” according to Section 3(3) of the Act.
A cartel member may contact the Commission by filing an application seeking a lighter penalty in exchange for providing complete, honest, and vital disclosures about the putative cartel to the Commission, according to Section 46 of the Competition Act, 2002.
These companies engaged in “cartelization in the supply of protective tubes to the Indian Railways by directly or indirectly deciding prices, allocating tenders, controlling supply and market, co-ordinating bid prices, and influencing the bidding process,” according to the Commission.
According to the order, the evidence included regular e-mail exchanges between the parties and the submitting of bids from the same IP addresses by certain parties.
The CCI also held ten persons from these seven businesses accountable for the anti-competitive activity of their respective companies/firms under Section 48 of the Act, according to the statement.
The investigation determined, based on evidence, that all parties reached a price and allocation agreement with the goal of manipulating the bidding process by forming a cartel of vendors.
The companies rebutted the report’s findings individually.
The report, it was contended, failed to prove any Appreciable Adverse Effect on Competition (AAEC) or market entry restrictions.
The CCI dismissed this claim, stating that “once an arrangement of the types described under Section 3(3) of the Act (including a cartel) is constituted, the same is considered to have an AAEC throughout India.” Thus, in the current case, it is axiomatic to assume that the parties’ alleged behaviour has resulted in AAEC in India.”
Another claim, that the firms did not act on any shared information, was also rejected by the CCI.
THE RATIO DECENDI
“Whether the information contained in or the share allotted in the abovementioned e-mails was implemented or reacted to the E-mails is irrelevant,” the CCI stated.
After reviewing the evidence and the DG’s report, the CCI found all firms guilty of anti-competitive agreements under Sections 3(3)(a), 3(3)(b), 3(3)(c), and 3(3)(d) read with Section 3(1) of the Act, and assessed penalties under Section 27(b) of the Act.
The firms, as well as some of the individuals in charge of the firms, were given 60 days to deposit their penalty sums.
CCI Chairperson Ashok Kumar Gupta, Member Sangeeta Verma, and Member Bhagwant Singh Bishnoi made up the Coram.
