2024 (11) TMI 1002 - CCI - Companies Law

Seeking confidentiality over its identity under provisions of Section 57 of the Act read with Regulation 35 of the Competition Commission of India (General) Regulations, 2009 - bid-rigging and cartelisation - abuse of dominant position - contravention of Section 3 of the Competition Act, 2002 - HELD THAT - There was a significant difference of more than INR 2000/- between bids quoted by OP-2 and OP-3; in the remaining two tenders viz. Tender Nos. 03221028 and 03211577, there seems to be a minor difference of around INR 10 in the bid amounts of OP-2 and OP-3. However, there is no evidence on record that any part of the remaining two tenders were awarded to OP-2 and/ or OP-3. Further, it is noted that the bids quoted by several remaining bidders (approved or un-approved sources) were in the same range or higher than the bids quoted by OP-2 and OP-3. Specifically, it is noted that in all three tenders, the approved source Nanda Engineering Works, quoted rates higher than the OPs. The Commission observes that apart from the bid quotations made by OP-2 and OP-3 in two tenders with minor difference in their prices, there is no other evidence on record, which may support the allegations of the Informant regarding cartelisation between them - it is no longer res integra that mere price parallelism is not sufficient to arrive at a finding of cartelisation without there being evidence of any plus factors in support of parallel pricing. In the present matter, there are no plus factors averred by the Informant indicating meeting of minds or collusion between OP-2 and OP-3 or among OPs. Accordingly, in view of the Commission, neither case of cartelisation in contravention of the provisions of Section 3 of the Act is made out in the present matter against OP-2 and OP-3 nor there arises any question of violation of the provisions of Section 3 of the Act by OP-1. The Commission is of the view that OP-1 being a consumer/ procurer of the impugned item has freedom to specify its requirements/ conditions/ EC and the said requirements/ conditions/ EC themselves cannot be deemed to be anti- competitive. Thus, the Commission does not find OP-1 to be in violation of the provisions of Section 4 of the Act also. The Commission finds that no prima facie case of contravention of provisions of the Act is made out against any of the OPs in the present matter and decides to close the matter forthwith in terms of the provisions of Section 26(2) of the Act - The Secretary is directed to communicate certified copy of the present order to the Informant, accordingly.

Summary

Issues Involved:

1. Alleged contravention of Section 3 of the Competition Act, 2002 regarding cartelization and bid-rigging.
2. Alleged contravention of Section 4 of the Competition Act, 2002 concerning abuse of dominant position by imposing restrictive eligibility criteria (EC).

Issue-wise Detailed Analysis:

1. Alleged Contravention of Section 3: Cartelization and Bid-rigging

The Informant alleged that two entities, OP-2 and OP-3, were involved in cartelization and bid-rigging in violation of Section 3 of the Competition Act, 2002. It was claimed that these entities had been consistently winning tenders over the years by accepting counter-offer rates, indicating a pattern of collusion. The Informant pointed to the reduction in their bids by significant percentages without a corresponding change in the steel price index as evidence of cartel behavior. Additionally, the Informant highlighted that the standard bid document of OP-1 considered offers from the same IP address as a suspected cartel, which was seen as a restrictive practice.

The Commission examined the bid details from the Impugned Tender and two previous tenders, noting a minor difference in bid amounts between OP-2 and OP-3. However, it found no evidence of the tenders being awarded to these parties in the past, nor any substantial evidence of collusion beyond price parallelism. The Commission reiterated that mere price parallelism does not suffice to establish cartelization without additional tangible evidence, known as "plus factors," indicating a concerted action or meeting of minds. Given the absence of such evidence, the Commission concluded that no case of cartelization was made out against OP-2 and OP-3.

2. Alleged Contravention of Section 4: Abuse of Dominant Position

The Informant alleged that OP-1 abused its dominant position by imposing restrictive eligibility criteria (EC) in the tender process, which allegedly supported cartel formation. The EC was criticized for ignoring past suppliers with proven records and for not adhering to Railway Board guidelines regarding vendor participation.

The Commission observed that the allegation of having only two active vendors was incorrect, as other vendors like Nanda Engineering Works and EC Blade and Tools Pvt. Ltd. were also actively bidding. Furthermore, the Informant failed to define the relevant market where OP-1 was allegedly abusing its dominance, merely stating that OP-1 was dominant in the procurement of the impugned item.

The Commission emphasized that a procurer, as a consumer, has the right to specify its requirements and eligibility conditions in tenders. This autonomy is considered sacrosanct in a market economy, allowing consumers to exercise their choice freely. The Commission cited previous cases to support the view that stipulating technical specifications or eligibility conditions in tenders does not inherently constitute anti-competitive behavior. Thus, the Commission found no violation of Section 4 by OP-1.

Conclusion:

The Commission concluded that no prima facie case of contravention of the Competition Act, 2002 was made out against any of the Opposite Parties (OPs) in the present matter. Consequently, the matter was closed under Section 26(2) of the Act, and the Secretary was directed to communicate the order to the Informant.