CCI imposes penalty of Rs . 6.25 crores on 11 Shoe Companies

The Competition Commission of India (CCI) has imposed a penalty of Rs. 625.43 Lakhs on 11 Companies in a case filed by Director General-Supplies & Disposal (DGS&D), New Delhi relating to a tender for supply of polyester blended duck ankle boots rubber sole. CCI found these 11 Companies to have violated the provisions of Competition Act, 2002 which deals with anticompetitive agreements. CCI had worked out the penalty @ 5% on the average of the gross turnover for financial years 2008-09, 2009-10, and 2010-11. CCI has directed these companies to deposit the penalty amount within 60 days from the receipt of the order.

This case was initiated on a reference made by Director General-Supplies & Disposal (DGS&D), Department of Commerce, Ministry of Commerce & industry, Govt. of India, New Delhi. The reference pertained to a tender enquiry dated 14.06.2011 for conclusion of new rate contracts for polyester blended duck ankle boots rubber sole. The reference alleged bid rigging and market allocation by the suppliers while bidding against the above tender enquiry.

After a detailed investigation, Competition Commission of India held that the bidder-suppliers by quoting identical/ near identical rates had, indirectly determined prices/ rates in the Rate Contracts finalized by DG S&D and indulged in bid rigging/ collusive bidding in contravention of the provisions of section 3(1) read with section 3(3)(a) and 3(3)(d) of the Act. Further, the Commission noted that the parties had also controlled/ limited the supply of the product in question and shared the market of the product amongst themselves under an agreement/ arrangement in contravention of the provisions of section 3(1) read with sections 3(3)(b), 3(3)(c) and 3(3)(d) of the Act.

Accordingly, CCI directed the contravening parties to cease and desist from indulging in such anti-competitive conduct in future. The Commission also imposed a penalty on each of the contravening company at the rate of 5% of the average turnover of the company.

The order of the Commission has been passed in Ref. Case No. 01 of 2012 and a copy of the order has been uploaded on the website of CCI at www.cci.gov.in.