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TMI Blog2018 (9) TMI 2129X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugning the joint tender floated by Public Sector Oil Marketing Companies (PSU OMCs/OMCs) on 02.01.2013 for procurement of anhydrous alcohol ('ethanol', hereafter) being in contravention of the provisions of Section 3 of the Act. Besides, it was also alleged that suppliers of ethanol -which mainly comprise sugar mills - have contravened the provisions of Section 3 of the Act by rigging bids submitted pursuant to the said tender, by quoting an exorbitant price for supply of ethanol to OMCs. 2. As the issues involved in both the Informations were similar and related, the Commission through a common order dated 27.05.2013 passed under Section 26(1) of the Act directed the Director General (DG) to investigate the matter. In the said order, it was noted by the Commission that the Informations revealed that pursuant to the notification dated 02.01.2013 issued by Ministry of Petroleum & Natural Gas, Government of India (MoP&NG) regarding mandatory 5% blending of ethanol with motor spirit/gasoline, the Government owned public sector Oil Marketing Companies (OMCs) viz. Indian Oil Corporation Limited (IOCL)/Hindustan Petroleum Corporation Limited (HPCL)/Bharat Petroleum Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions to the DG 4. As detailed above, the Commission, after considering the entire material available on record, vide its separate orders passed under Section 26(1) of the Act, directed the Director General (DG) to cause an investigation to be made into the matter and submit a report. Investigations by the DG 5. The DG, after completing the investigation, filed a common Investigation Report dated 20.07.2015. It was concluded by the DG that ISMA had violated the provisions of Section 3(3)(a), 3(3)(b) read with Section 3(1) of the Act. The conduct of EMAI was also found to be in violation of Section 3(3)(a) of the Act. However, allegations against NFCSF were not found to be substantiated. Similarly, the allegations levelled against OMCs were also not found to be substantiated. So far as the allegations against the bidders who participated in the tender in respect of the depots located in UP, Gujarat and Andhra Pradesh were concerned, the DG concluded that the following identified parties (bidders) had violated the provisions of Section 3(3)(d) of the Act: Uttar Pradesh (i) Bajaj Hindusthan Ltd. (ii) Upper Ganges Sugar & Industries Ltd. (iii) Triveni Engineering Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission after addressing the issues highlighted by the Commission and has concluded that no contravention of the provisions of the Act is made out against any of the bidders who participated in the bidding, in respect of the various depots located in State of Maharashtra. Consideration of the DG Reports by the Commission 9. The Commission, on consideration of the main Investigation Report, cross-examination report and other material available on record, decided vide its order dated 28.03.2017 to proceed against the following 20 sugar mills which, apart from including the 14 originally arrayed bidders who had participated in the bids for supply of ethanol to depots in UP/Haryana/Punjab, also included the bidders [who, though not made OPs, mentioned in Case No. 21 of 2013 but against whom the DG recorded finding of contravention namely (a) Sahakari Khand Udyog Mandal Ltd., (b) Shree Ganesh Khand Udyog Sahakari Mandli Ltd., (c) Shri Kamrej Vibhag Sahakari Khand Udyog Mandli Ltd., (d) Shree Mahuva Pradesh Sahakari Khand Udhyog Mandli Ltd., (e) The Andhra Sugars Ltd. and (f) Sri Sarvaraya Sugars Ltd.] who participated in the bids for supply of ethanol to depots in Andhra Pradesh and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from 3 trade associations and 3 PSU OMCs. Replies/Objections/Submissions of the Parties 13. The parties filed their respective replies/objections/post-hearing written submissions to the Report of the DG besides making oral submissions. Replies/objections/submissions of the Informants 14. Out of the 6 Informants in the present batch of cases, only two Informants appeared and out of them, only one (India Glycols Limited/IGL) filed its objections/suggestions to the DG report and the same are noted in the succeeding paras. 15. Supporting the conclusions of the DG that the conduct of the OPs was in violation of the provisions of Section 3(3)(d) of the Act, it was submitted that the conclusion of the DG in exonerating PSU OMCs and NFCSF, was not correct. The deliberate act of PSU OMCs in not initiating any action against bidders showed that they aided and abetted the conduct of bid-rigging and cartelization by the bidders beyond the common platform which existed all along at ISMA and NFCSF levels. 16. It was pointed out that OMCs had failed to provide any economic or logical justification as to why "separate" tenders were issued in 2006-07 and why "joint" tender was considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification was issued by MoP&NG for implementation of the mandatory ethanol blending with petrol, the meeting convened for 06.12.2012 by ISMA did not take place. The next meetings scheduled for 19.12.2012 and 27.12.2012 also could not take place as very few members came to attend the said meetings. 22. It was submitted that the DG not only disregarded the evidences provided by ISMA but also misinterpreted the statements made by other witnesses that supported ISMA's stand. It was further submitted that mere holding of meetings by an association is not anti-competitive in itself unless it is proved that the purpose for holding such meetings was anti-competitive. Calling of meetings by ISMA for discussion over policy and other industry related issue is a legitimate mandate and such an activity by no means can be construed as anti-competitive. Attention was also invited to the statements of representatives of ISMA that established the purpose of meetings was to discuss mandatory 5% ethanol blending across the country under the EBP Programme. 23. It was pointed out that the joint tender was floated by OMCs on 02.01.2013 and as such there was no occasion for ISMA to discuss the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted by the members in response to the tenders floated by OMCs. Such matters were to be decided by individual members and the association had no role to play in such decisions. 28. Further, EMAI did not have any association/affiliation with ISMA and NFCSF. It was pointed out that the association members who were from the private sector (and not the cooperative sector) might be members of ISMA. EMAI, however, did not have any information with regard to such memberships. The President of the association was also a Director of NFCSF by virtue of holding a position as the President of Maharashtra State Cooperative Sugar Factories Federation Ltd. There was no correspondence between the association, ISMA and NFCSF. 29. With regard to the grievance of the Informants that ethanol manufacturers in concert with each other quoted prices at the basic price of Rs. 40/- or more, it was submitted that IGL's own subsidiary viz. Shakumbari Sugar & Allied Industries also quoted a basic price of Rs. 41/- per litre in respect of the subject tender. Thus, it was alleged that IGL was guilty of applying double standards. 30. It was further reiterated that EMAI had no role to play in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (chemical industry) as compared to the quantity and price submitted in the tender floated by OMCs. 34. It was stated that the DG without any reason arrived at a conclusion that none of the members of EMAI had quoted price below Rs. 40,000/- per KL whereas the data showed to the contrary that the members of the association had quoted prices varying from Rs. 38/- to Rs. 48/- per litre. Hence, the statement of the President of the association had no correlation with the newspaper report and the tenders filled by the members of EMAI. Merely because OMCs had negotiated with ethanol suppliers which qualified in the tender (L1) and had reduced the price to Rs. 36/Rs. 37 per litre, did not imply that the price quoted by them were excessive. 35. With regard to meetings convened by EMAI, it was submitted that the meetings held on 09.01.2013 and 21.01.2013 were called by EMAI to explain and train its members to submit online tender of OMCs as it was the first online tender floated by OMCs. 36. In view of the above, it was prayed that no further action was warranted in the present matter and the instant proceeding be terminated without any further order. Replies/objections/submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocieties Act, 1961. The member farmers of such societies are the ultimate owners through their shareholdings in sugar mills. Such mills work on the principle of "no profit no loss" and the surplus of income over expenditure is passed on to the member farmers who have supplied sugarcane during the year to the mills. 43. Adverting to the bids submitted by these companies in response to the subject tender, it was pointed out that during the Financial Year 2012-13, the cost of raw material incurred by these companies for producing ethanol was Rs. 33.829, 32.25, 33.68 and 33.06 per litre respectively. 44. It was further stated that the demand for rectified spirit and ethanol in Gujarat is high because of the presence of chemical industries. As per the policy of the State Government, a sugar factory could produce ethanol upto a maximum quantity of 50% of its rectified spirit production, and the main reason for lesser quantity of production of ethanol by these OPs was attributable to non-lifting of ethanol by OMCs. 45. It was submitted that price, depot and the quantity supplied were finalized by the respective Managing Director(s) based on the inputs received from the concerned Distil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had supplied huge quantities of ethanol to private chemical industries at much higher prices than those quoted in the tender for supply of ethanol to OMCs. It was also pointed out that the sugar industry in the country is not a freely competitive industry. The production of ethanol by a sugar factory depends upon the following factors: (a) Ethanol quota depends upon the production of rectified spirit as per the policy of the Government. (b) Only 50% ethanol can be produced of the total quantity of rectified spirit produced by the sugar factory. (c) Non-lifting of ethanol in time by OMCs also deterred the sugar factories from filling high quota for supply of ethanol to OMCs. (d) The policy and procedure adopted by OMCs while finalization of tender by pursuing negotiations with L1 along with L2 also discouraged the sugar factories from submitting the tenders to OMCs. (e) The demand for supply of ethanol and price realization in chemical industry was higher than the price finalized by OMCs after submission of tenders. Hence, mainly due to this reason, answering OPs had quoted less supply of ethanol for tender floated by OMCs. (f) The EBP Programme of the Government also ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be an agreement which was likely to cause appreciable adverse effect on competition within India. The definition of "agreement" includes any arrangement, understanding or action whether it is formal or in writing. The expression of such views did not amount to any arrangement, understanding or action. It was also placed on record that the production cost of ethanol during the Financial Year 2012-13 was Rs. 42.11, 39.65, 41.55, 41.80 per litre respectively for the answering OPs whereas the prevailing market rate was Rs. 40 to 45 per litre. It was stated that these OPs quoted the rate of Rs. 42,100 each per KL each. All those who participated in the tender process had taken their own decisions with regard to the respective sugar factories with which they were associated. 55. It was submitted that there was no meeting attended by these OPs during December 2012 and January 2013. It was further submitted that no tender was allotted to any of the sugar factories in Gujarat State and as such no prejudice was caused to anybody. 56. Based on the above, it was submitted that no further action is warranted and the present proceedings may be terminated without any further orders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as about 7500 KL per annum, out of which about 4000 KL was supplied to regular pharma companies and the balance 3600 KL was decided to be supplied to OMCs. Thus, 1800 KL each was offered to Rajmudhry and Vijayawada terminals. 62. In view of the above, it was prayed that the DG Report be rejected and an order be passed as the Commission deems fit and proper in the interest of justice. Replies/objections/submissions of Sri Sarvaraya Sugars Ltd. (Sri Savaraya) 63. In its reply, the answering OP raised a preliminary objection stating that the DG had unilaterally impleaded the company without any direction of the Commission and issued probe letters seeking reply and appearance before him. It was submitted that only the Commission could pass orders for impleadment or discharge of a party from the case and the DG possessed no such power or authority. As there was no order passed by the Commission to implead the answering OP, the findings of the DG qua it must be set aside. Reference was also made to a decision of the Hon'ble High Court of Madras in the case of Hyundai Motors India & Ors. v. Competition Commission of India, (2015) 2 MLJ 560. 64. On merits, it was submitted that mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ratio of basic rate was to be divided with quantity the parties were willing to supply, then the present OP would in fact be offering a higher rate as compared to the rate offered by Andhra Sugars. 68. It was denied that the answering OP attended or participated in any meeting of bidders or any meeting convened by ISMA in relation to the impugned tender. It was submitted that only one meeting held on 24.01.2013 was organized by ISMA after the release of the tender and no representative of the OP attended the said meeting. In fact, the schedule of the meeting was already circulated on 17.12.2012 i.e. before the announcement of tender. 69. It was further submitted that the minimum benchmark price fixed by the oil marketing companies in the region of the OP was Rs. 38,200/- per KL, which was less than the quoted price of OP i.e. Rs. 38,600/-. Further, it was ultimately Andhra Sugars which was rated as L1 bidder by OMCs and awarded the Letter of Intent for supply of ethanol at the benchmark rate. It was only subsequently that the OP, who ranked as L2, was given an opportunity to supply the balance quantity requirement which L1 bidder was unable to supply and the same had to be sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ethanol and Net Delivered Cost which included basic price, taxes and freight charges. The L1 was to be determined by net delivered cost and not on the basis of basic price. 76. Adverting to identical or similar pricing, it was submitted that identical prices by themselves do not prove cartelization. The OMCs had invited bids for 110 depots. However, bids were made only for 71 depots. Of these, identical bids were found only in 5 depots and this can be sheer coincidence resulting from the fact that the sugar industry is highly regulated and the pricing of the most important cost component in the industry i.e. sugarcane, is also regulated. 77. With regard to allegations of identical prices in respect of depots located in UP, it was submitted that Bajaj decided the basic price in each State considering various factors like ease of doing business in each State and after deciding the basic price, it quoted the said basic price everywhere in that State. Accordingly, it was submitted that the basic price quoted by Bajaj in UP was the same for all the depots located therein. Similarly, the basic price quoted for different depots in Delhi was also the same. After deciding the basic p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depots and that too with only one of the bidders and, as such, the same could be attributed to mere coincidence. 83. It was also submitted that for the purpose of finalization of tender, NDC is relevant and not the basic price an aspect which was ignored by the DG with result the Investigation Report continued to harp on the basic price and not NDC. It was pointed out that in case of Bajaj, it was only one place i.e. depot of Mathura where NDC of Bajaj was tallying with only one bidder. It was also highlighted that there was no similarity in NDC quoted by bidders in UP for various depots and since L1 was to be awarded on the basis of NDC, there could not be an allegation of cartelization by quoting similar prices. Moreover, in the absence of any knowledge of benchmark prices which was decided by OMCs after the bidding process was over, no cartelization could have taken place. 84. It was also submitted that in the State of UP, the prices quoted by Bajaj were lower than in other States i.e. Delhi and Punjab. Quotes in other States like Maharashtra were comparatively much higher i.e. above Rs. 40000 per KL. 85. It was also pointed out that EMAI had declared that the price of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bearers, it was submitted that except for the details of calls made, no incriminating evidence as to the details of conversation made during such calls by way of tape recorded voices had been cited as specific evidence in the Investigation Report. Mere making of phone calls between office bearers of trade association and the executives of the members of the association during period of investigation could not be construed to hold that these calls were made with ulterior motive of fixing prices unless there was substantial evidence to the contrary. 89. In view of the above, it was prayed that Bajaj has not contravened any provisions of the Act and the proceedings against Bajaj be dropped in interest of justice. Replies/objections/submissions of Avadh Sugar & Energy Ltd. (Upper Ganges Sugar & Industries Ltd. and The Oudh Sugar Mills Limited stood merged with Avadh Sugar & Energy Ltd.) (Avadh Sugar) 90. In its reply, Avadh Sugar pointed out that the DG took the price of Rs. 34 per litre quoted by Kisan Sahkari Chinni Mills (KSCM) - a State run cooperative sugar mill - which was further reduced to Rs. 33.70 per litre, as a benchmark competitive price. Accordingly, the price of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e litres only. 94. Faulting the DG Report for taking KSCM's quote in arriving at a competitive benchmark price, it was submitted that the general rule for taking a sample across globe is to take average of few players/bidders in the normal market conditions and not solitary examples. If the lowest finalized price is the only criterion to arrive at a benchmark price, it is not understood as to why the basic price of Rs. 31.50 per litre finalized by Shakumbari was not considered as a benchmark price. It was also alleged that price quoted and finalized by KSCM for negligible quantity could not be equated with the bidders quoting a much bigger quantity. 95. Further it was submitted that since the private players were never aware of the benchmark price, the reduction or non-reduction of the prices in comparison to it, was vague and imaginary. Without knowledge of the benchmark prices, the bidders should not be made liable for not reducing the price to bring the same within the benchmark prices. Not even a single litre of ethanol was procured by OMCs over and above the benchmark prices. In all such cases where the final negotiated price offered by L1 bidder was more than the benchm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r period i.e., from 2008-09 to 2011-12 was Rs. 27/- per litre which could not be considered as actual market price. 99. Lastly, it was submitted that the quantities for different locations were bifurcated as per the past experience and practice besides various other factors such as: (i) to prevent the risk of not getting any order, (ii) to reduce the risk of non-supply, (iii) to ensure regular and an uninterrupted supply and (iv) to get better opportunity to get maximum bid quantity. 100. It was also pointed out that though the DG stated in the Investigation Report that it called for IP addresses of all the bidders, yet the DG has not given any finding about the said IP addresses. Thus, it seems that the DG must have arrived at a finding that the IP addresses of all the bidders tendering the bids were different and as such, it is obvious that no common platform was provided to or used by the answering OP. 101. Finally, it was submitted by the answering OP that the DG Report is a nullity being against material on record besides contrary to the evidences. Hence, it was prayed that the answering OP be exonerated from all the allegations levelled against it and the Information be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though Triveni was successful in respect of three Depots of Meerut (Partapur), Mathura and Agra (Tundla) for the quantities of 6000 KL, 2500 KL, 1000 KL respectively, the indents placed for these three depots were only for 4719 KL, 2461 KL and NIL respectively. Thus, the allegation that Triveni could have predicted the quantities in the future while making its bid was baseless. 107. It was further submitted by the OP that the DG was wrong in taking the price of Rs. 33.70 per litre quoted by KSCM as the basic price, as KSCM's bid was only for small quantity and normally the quality of a government body was treated as lower to private bodies. This was because private companies had to compete with other efficient private bodies. 108. With regard to meeting of minds, it was submitted that when OMCs did not feel that the prices obtained by them in States other than the State of UP while being above Rs. 40/- were prejudicial to public interest, it was extremely incongruent for the DG to suggest that within the State of UP, a price above Rs. 40/- indicated cartelization. 109. On call data records, it was submitted that the association only provided information about upcoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cknow Depots as these depots having huge requirement were near to the Unit of the OP and supply/transportation cost was less in comparison to other depots. Had Simbhaoli not supplied the balance quantity at these two depots, stock lying with Chilwaria Unit would have been left unsold. Therefore, the DG's observation that there was violation of the Act by Simbhaoli was totally incorrect. 116. It was further submitted that the DG's observation that L1 bidders did not reduce price because of coordinated conduct was incorrect and baseless as bid price was submitted only after proper calculation taking into consideration all the factors. Therefore, question of reducing price did not arise at all. It was stated that depots where OMCs called bidders for negotiation, it was well within the right of L1 bidder to not reduce price. Therefore, the observation of the DG that answering OP did not reduce price was unfounded. 117. The DG's conclusion of coordinated bidding based upon the call records between Shri R.K Singh of Simbhaoli and Shri Arvind Jain of Dhampur Sugar was denied. While admitting such interactions, it was submitted that such conversations took place in normal cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FY 2012-2013. However, while attributing motive and profit maximization, the DG had failed to take this into consideration. The DG had also ignored the fact that the same parties alleged to have cartelized for depots in UP, had quoted different prices for depots located outside State of UP. 122. Challenging the observation of the DG that a quote of Rs. 35 per litre would have been the basic competitive price, it was submitted that OMCs themselves had worked out a benchmark price for each depot which averaged to Rs. 34.22 per litre. Furthermore, an analysis of OMCs' benchmark net price and the final contracted price for the two depots in UP for which Dhampur was awarded contracts (Najibabad and Mathura) showed that the difference per litre between the two was less than one Rupee. 123. Dhampur also challenged the findings of the DG that freight charge quoted by the parties were not found to be based on past payment or the actual freight paid subsequent to award of the tender, to show understanding between the bidders to reach close to pre-determined NDC. It was submitted by Dhampur that it did not contact any freight carrier to obtain actual charges, rather it worked on estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the industry, it was the first time that OMCs had floated an e-tender and this was the first occasion on which bidding was to take place electronically. Hence, it was submitted that it was normal in such circumstances, where an entirely new method of tender participation had been introduced, for industry participants to talk to one another regarding the various queries/clarifications/issues they may face. Further, it was also pointed out that the DG called for and examined CDRs for the period December 2012 and January 2013, hence the observation of the DG that there were no calls after the tender closed on 28.01.2013 was meaningless. 128. Concluding the submissions, it was submitted that in light of the decision of the Hon'ble Supreme Court of India in the case of Excel Crop Care Limited v. Competition Commission of India & Anr., Civil Appeal No. 2480 of 2014 decided on 08.05.2017, the turnover accrued to Dhampur through sale of ethanol ought to be considered as the relevant turnover in case of a penalty being levied on it. Replies/objections/submissions of Balrampur Chini Mills Ltd. (Balrampur) 129. In its reply, Balrampur stated that the DG had made cardinal error i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try issues that ISMA takes up with the Central and State Governments from time to time. 133. On similarity in bids, it was submitted that basic price quoted by Balrampur was independently determined and was the highest amongst all the bidders in UP. Further, not only did Balrampur refrain from quoting an identical price, but its quote was only in the outer range of all the bids made in the tender. Accordingly, it could not be said that the price quoted by Balrampur was in concert with its competitors. 134. With regard to quantity allocation, the DG erroneously concluded that the quantities offered by Balrampur were a result of a concerted action with its competitors, which allegedly included sharing of quantities at the depots that it bid. Balrampur had bid for four depots in UP i.e. at Gonda, Baitalpur, Kanpur and Mugalsarai and offered varying quantities independently, on the basis of certain commercial factors and reasons. The selection of the depots was based on the proximity to Balrampur's distilleries and historical trends. Further, with regard to quantities quoted, it was submitted that no ethanol production for about 3 months during rainy season led to lack of storage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was either low or higher than the benchmark price plus 10% as decided by OMCs. 139. With regard to benchmark price, it was submitted that where the prices of L1 bidders were above the benchmark price, the final price was negotiated with the bidders after enhancing the benchmark price by 10%. However, the DG has not considered the revised benchmark price in its analysis. 140. Lastly, it was submitted that in the absence of any evidence to establish "agreement" amongst the bidders, the allegation against Balrampur deserves to be dismissed. Moreover, in view of there being no "plus factors" the DG erred in relying upon price parallelism alone to conclude cartelization amongst the bidders. 141. On penalty, it was submitted that in the event of the Commission holding Balrampur guilty of contravention of the provisions of Section 3 of the Act, only the "relevant turnover" ought to be considered while imposing the penalty i.e. the turnover generated from the product under investigation, rather than the overall turnover of the enterprise. Replies/objections/submissions of Mawana Sugars Ltd.(Mawana) 142. It was submitted that the information was an attempt to misuse the forum of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tender was to take place on the basis of L1 procurement price. In this regard, it was submitted that in any tendering procedure, the tender has to be finalized on the basis of net delivered cost and the basic price was of no consequence in the bidding process. 148. It was also pointed out that the statement of Shri Gore in cross-examination established beyond doubt that the prices and terms on which OMCs bought ethanol was a negotiated price. It is a well-recognized principle that negotiated price is anathema to bid-rigging as understood in the sense of competition law. Therefore, the price or quantity quoted by any vendor was of no consequence as it was the decision of OMCs regarding the price and quantity which was to be considered final. It was submitted that in the case of negotiated purchase of goods or services, no presumption of appreciable adverse effect on competition which is sine qua non for invoking the jurisdiction of the Commission under Section 3(3)(d) of the Act could be made. 149. It was also submitted that the benchmark price was internally fixed by OMCs for each depot for internal working/decision. This benchmark price was not disclosed to the bidders an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard was incorrect and against the statutory provisions. Both ENA and RS were treated exactly in the same way as CENVAT Credit. 154. Adverting to the finding of the DG that the net realized sales price of ENA at the time of tender was @ Rs. 31 per litre, it was stated that even if the price of ENA was considered to be as stated by the DG, the benchmark price arrived at by the DG for ethanol @ Rs. 33 per litre was beyond any stretch of imagination and was incorrect. It was submitted that the total cost of conversion of ENA to ethanol was Rs. 3 per litre due to reduction in volume, fuel & labour cost and cost of denaturant. This was the bare minimum incremental cost as the industry did not run only on these basic conversion costs. Further, costs such as time, interest charged by bank, administrative cost, risk involved in tender, compulsory supply even during non-production, storage, penalty etc. were also involved. Thus, the amount of Rs. 33/- per litre arrived at by the DG was not only imaginary but was also impractical. The DG also recorded a wrong finding that KSCM had reduced its prices to the level of Rs. 33.70 per litre during the course of negotiation. It was pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and did not attend any of its meetings. It was also pointed out that the only allegation in this regard was with respect to a meeting convened by ISMA which was stated to be attended by the representative of the answering OP on 06.12.2012. In this regard, it was submitted that the said meeting was convened much before the floating of the tender and as such it was incomprehensible as to how a person who was unaware of the details of a future event could be held guilty based on this count. The finding of the DG that the three meetings were convened by ISMA on 06.12.2012, 19.12.2012 and 27.12.2012, was denied being incorrect, misconceived and without any evidence. It was highlighted that the tender was floated by OMCs on 02.01.2013, whereas the alleged meetings were held on 06.12.2012 and 27.12.2012. 161. With regard to IP addresses of the bidders, it was submitted that though the DG stated in the Report that it called for IP addresses of all the bidders, the DG had not given its findings about the said IP addresses. The fact that all the IP addresses were different showed that no common platform was provided to or was used by the answering OP. 162. In respect of call data records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upporting evidence and did not meet the test of "preponderance of probabilities". The circumstantial evidence relied on by the DG did not establish any infringement by Uttam Sugar. At best, the DG findings only showed parallel conduct by Uttam Sugar, which on its own and in the absence of 'plus factors', was insufficient to establish culpability. 169. Further, it was submitted that the DG's findings were silent on delineation of the 'relevant market'. Failure to clearly delineate the relevant market with respect to which a coherent competitive analysis can be undertaken has made the investigation utterly arbitrary and has led to erroneous conclusions. In fact, a closer scrutiny of the economic evidence sufficiently demonstrates that Uttam Sugar was not a party to any explicit/implicit arrangement contravening the provisions of the Act. 170. With regard to ISMA meetings, it was stated that Uttam Sugar's representatives were not present in any of these meetings. Further, Uttam Sugar did not have a distillery in operation till 2012 and therefore it could not manufacture and bid for ethanol tenders of 2006-07 and 2009. 171. With regard to CDRs, it was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any agreement, arrangement and understanding of Dalmia with the other OPs. It also failed to point to any advantage accrued to Dalmia out of such alleged agreement amongst the bidders of the tender. It further failed to consider that the participation of Dalmia in the tender was guided by its own business and commercial considerations such as forfeiture of earnest money amount in the previous financial years, first time production of ethanol and proximity to the depots to which Dalmia tendered its bids, amongst other cost related factors. Further, it was submitted that Dalmia's bids were similar and not identical to the prices quoted by other parties. In any event, a catena of cases have held that price parallelism is not sufficient to establish violation of Section 3 of the Act. 177. With regard to the findings of the DG that Shri Gopendra Singh, an employee of Dalmia, was a part of the meetings convened by ISMA prior to the release of the subject tender and its reliance on calls made by Shri Gopendra Singh to Shri G.K. Thakur, it was submitted that it was a matter of record that Shri Singh never attended any such meeting. Moreover, Dalmia, in its replies filed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his previous failure, Dalmia had to also forego its earnest money deposited in support of its bid under the previous tender. Dalmia's commitment to its existing customer base was another important factor and it would have been a risky and loss making proposition to quote higher quantities for the tender. The DG report had also clearly ignored the fact that Dalmia was the only bidder which ultimately supplied its entire bid quantity, and at the same price (at the price lower than benchmark price) as that of the selected L1 bidder i.e. KSCM, despite not being L1 bidder in any of the three depots. Further, Dalmia's projection for immediate future production was also kept at modest levels after closure of its distillery which had impacted Dalmia's confidence to produce higher quantities for supply under EBP Programme. 180. It was stated that the DG report also erred in concluding that Dalmia's decision not to submit bids for supply of ethanol to other depots indicated division/geographical allocation of depots, amongst all the private bidders from UP participating in the tender. Dalmia had only submitted bids for depots located at Banthra, Kanpur and Lucknow. This was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tender, Dalmia had factored in the market price of molasses and the market price of electricity consumed in production of ethanol for the tender to determine the final basic price of Rs. 35.3 per litre. 183. With regard to the freight charges and taxes used to fix quoted prices, it was submitted that the DG's findings are contrary to materials and evidences on record. Dalmia had included freight charges, in its bid, purely on the basis of quotation received from its transport. The local taxes, excise and other such levies were determined by the Central and State Governments and therefore the ethanol manufacturers had no control in determination of the same. As a matter of fact, Dalmia ended up paying more than what it factored in bid price. 184. Further, the DG arbitrarily decided to exclude KSCM from the purview of investigation, at the same time placing heavy reliance upon KSCM's pricing pattern to arrive at conclusions against private bidders, including Dalmia. The DG conveniently decided to exclude the price quoted by KSCM for the purposes of examination of agreement on the price band on the pretext of KSCM being a state aided cooperative mill and others being priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of ISMA/EMAI/NFCSF, the entire section up to the final analysis was devoted to the conduct of the above mentioned five bidders in relation to identical pricing in the said tender. Despite analyzing the conduct of only 5 bidders in detail, the DG Report found all the private manufacturers violating the Act solely on the basis of the conduct of ISMA. It was submitted that in the absence of definitive circumstantial evidence, particularly, against the answering OP, such finding was unsustainable. Further, the circumstantial evidence stated in the DG Report fell considerably short of standard of proof for cartelization. 189. It was submitted that as per DG Report, the price band of bids for depots in UP was Rs. 3,500/- (37500-34000), which the DG considered as too small. However, an analysis of the DG's findings with respect to the other States showed that the price band in UP was clearly larger than 6 of the analyzed States. 190. With regard to conduct of Seksaria, it was submitted that it bid for only two depots viz. Kanpur and Lucknow. For both the depots, the answering OP quoted a bid of Rs. 35500/- per KL. The price of main raw material i.e. molasses was common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturers. 196. In view of the above, it was prayed that the observations in the DG Report against Seksaria be rejected. Replies/objections/submissions of Sir Shadi Lal Enterprises Ltd. (Shamli Distillery & Chemical Works) (Sir Shadilal/Shamli) 197. Denying the findings made by the DG, it was stated that the answering OP submitted its bids for two depots viz. Partapur (Meerut) and Aonla. It was highlighted that though the OP quoted a basic price of Rs. 35600/- KL for both the depots, the NDC was different for such depots. In none of the depots, the answering OP was L1. However, it matched the negotiated price of L1 in both the depots. 198. Reference was also made to the conduct of KSCM and it was pointed out that though the capacity of KSCM was 9000 KL, it only quoted for 2500 KL and that too for five different depots quoting a quantity of 500 KL for each depot. Thus, it was argued that splitting of the total quoted figure amongst the nearing depots was a normal phenomenon to minimize the chance of loss and maximize the probability of getting the orders. 199. It was also explained that for Partapur depot, there were 7 bidders out of which the NDC price of only 3 bidders was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the issue, it would be appropriate to note the background of the Ethanol Blended Petrol Programme ("EBP Programme"). This programme was introduced by Government of India (GoI) keeping in mind the beneficial effects it would have for the agriculture sector as well as towards the country's environmental footprint. At this stage, it may be noted that ethanol is produced in India from sugar molasses. From molasses, Rectified Spirit (RS) is produced having a strength of 95%. RS is then further distilled to produce ethanol having strength of 99.80% alcohol which can be blended with petrol. 206. Accordingly, EBP Pilot Programme was launched in 2002-03 for 5% ethanol blending with petrol. Pilot project was started at Miraj & Manmad in Maharashtra and Bareilly in Uttar Pradesh. Subsequently, GoI extended EBP Programme to 9 States and 4 UTs w.e.f. 01.01.2003. The programme could only be partially implemented during 2003-04 and 2004-05 due to low availability of ethanol owing to lower sugarcane production. 207. In September 2006, resurgence in sugarcane production led GoI mandate 5 percent blending of ethanol in petrol across 20 States and 8 Union Territories subject to commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugar Factories Limited (NFCSF) and Ethanol Manufacturers Association of India (EMAI) persuaded the OMCs to come out with a joint tender for the purpose of procuring ethanol. The said joint tendering by OMCs was alleged to be an agreement amongst horizontal players to procure ethanol from various suppliers in contravention of the provisions of Section 3 of the Act which was likely to cause appreciable adverse effect on competition within India in supply and distribution of ethanol. It was also alleged that the sugar manufacturers who had participated in the joint tender of 2013 manipulated the bids by quoting similar rates and in some cases identical rates through an understanding and collective action in violation of the provisions of Section 3 of the Act. 210. In the aforesaid backdrop, before examining the issue of alleged bid-rigging by sugar mills in respect of the joint tender floated by OMCs, it is appropriate to note that the DG did not find any contravention of the provisions of the Section 3 of the Act by the PSU OMCs in floating a joint tender, as such arrangement was found to enhance efficiency in respect of procurement of ethanol by saving wastage of time, money and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they might be actually priced out of the market. Moreover, the entire existing system of equitable distribution and functional coordination would also be seriously hampered in case separate tendering is conducted. 215. Moreover, the Commission also noted that since the terms of the tender are same for all the OMCs, floating a joint tender is not only a more efficient option, but is also more cost-effective, since it eliminates cost, time and effort in floating multiple tenders with the same terms and conditions. 216. By floating a joint tender and thereafter, distributing the procured ethanol amongst themselves, the OMCs are also giving themselves an opportunity of equitable blending of ethanol such that, no particular OMC is able to provide the ethanol-blended petrol, to the exclusion of others. By acting in such a manner, all the OMCs are able to fulfil the mandate provided by the Government, without the exclusion of any OMC. 217. In view of the above noted operational and commercial considerations, the Commission holds that floating of joint tender by OMCs for procurement of ethanol per se cannot be construed as anti-competitive particularly when such process has evident ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 27 per litre for procurement of ethanol from the sugar mills which remained unchanged between 2009-10 to the date of the present tender in 2013. As per the terms and conditions of the tender, the L1 for each depot was to be decided on the basis of Net Delivered Cost (NDC) quoted by the bidders. The NDC included taxes and freight charges over the basic price which was mainly ex-factory price of ethanol. It is also observed that the OMCs had decided a benchmark price for all the locations after closing date of the tender which is linked to the landed cost of Motor Spirit (MS) including excise duty and cost of ethanol blending at each procurement location. At the time of finalization of the price, the price quoted by L1 bidder was compared with the benchmark price of that location and accordingly decisions were taken. 221. The subject tender was floated for procurement of ethanol at 110 depots of the OMCs spread across the country. A total of 75 bidders logged in the system and 69 players submitted bids. On 12.02.2013, the bids were evaluated for technical qualification and 64 bidders were found qualified as per the bid qualification criteria. The details of the minutes of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material available on record. In this regard, it is noted that though the bidders of other States, except UP, were not named specifically as Opposite Parties in any of the Informations, their details were mentioned in the information filed in Case No. 21 of 2013. Moreover, the order passed by the Commission under Section 26(1) of the Act did not confine the investigation to State of UP. In this regard, it is also observed that by virtue of Regulation 20(4) of the Competition Commission of India (General) Regulations, 2009, the Report of the DG shall contain his findings on each of the allegations made in the information or reference, as the case may be, together with all evidences or documents or statements or analyses collected during the investigation. In these circumstances, no fault can be found with the investigation conducted by the DG in respect of such bidders who were not specifically arrayed as parties. 226. Furthermore, as noted earlier, the Commission has forwarded copies of DG Reports to such bidders besides hearing them at length. In these circumstances, the Commission finds no merit in the plea raised by such bidders as sufficient opportunity including oral heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C.M, Manakpur, Mawana, Oudh, Seksaria, Shamli, Simbhaoli, Simbhaoli (Brijnathpur), Triveni, Upper Ganges, Uttam Sugar participated in the same. 233. From the data relating to basic price and NDC as summarized above, it is observed that KSCM bid for 4 depots and it emerged as L1 at all these four locations. Similarly K M Sugar bid for one depot and had emerged as L1 at that location. Balrampur, Dalmia, Manakpur, Seksaria, Shamli, Upper Ganges, Uttam Sugar did not emerge as L1 at any location. It is observed identical Basic Price of Rs. 35600/- KL was quoted by Bajaj for 10 depots, by Dhampur for 6 depots, by Mawana for 2 depots, by Shamli for 2 depots and by Upper Ganges for 2 depots. Similarly, identical Net Delivered Cost of Rs. 41850.16/- per KL were quoted at 2 locations by 5 bidders as follows: 234. The distribution of basic price quoted and Net Delivered Cost by the bidders have been depicted by way of a scatter plot to capture the clustering of basic prices quoted as well as to illustrate the variation in the Net Delivered Cost. 235. It can be observed from the above graph that basic price quoted by the sugar mills/ethanol suppliers is clustered around Rs. 35,600/- simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders in respect of procurement for depots located at UP, it emerges unmistakably that bids were quoted in a very narrow price range in respect of basic price and NDC, by all the private players. It also emerges that two or more bidders in respect of 5 depots viz. Partapur, Aonla, Najibabad, Mathura and Mughalsarai quoted exactly identical basic prices. Further, it is also observed that bids quoting identical NDCs were submitted in respect of 4 depots (Aonla, Najibabad, Partapur, Mathura) of Western UP by 5 bidders (Dhampur, Bajaj, Upper Ganges, Sir Shadilal-Shamli and Mawana). 240. At this stage, the Commission also notes that the plea of the bidders that out of 110 depots across India, the instances of identical bidding are only few, is misconceived. It is observed that the bidders were not competing in respect of all 110 depots. In fact, most of the bidders have concentrated only in 4-5 depots located near to their respective distillery. Hence, their conduct has to be judged and analysed on the basis of the depots where they submitted their bids, and not on pan-India basis. There is economic rationale for the bidders to bid for the depots which are in the vicinity of their disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at UP, the Commission notes that the lowest basic price quoted was by KSCM of Rs. 34000 per KL. In this regard, it is observed that KSCM is a state run cooperative mill, whereas all the other bidders are private players. Hence, if the bids of KSCM are excluded, the price band of private bidders ranges between Rs. 35000 per KL to Rs. 37500 per KL. However, as noted by the DG, if the basic price of Rs. 37500 per KL quoted by Upper Ganges at Mathura depot is excluded which was accepted to be non-serious by the company itself, the price band essentially ranges between Rs. 35000 per KL to Rs. 35999 per KL. Similarly, the price range of NDC is between Rs. 41775 per KL to Rs. 44735 per KL. Hence, there was a difference of about Rs. 3000 per KL in the NDC quoted by the private players. 243. On an analysis of the pricing pattern, the DG observed the following points to have emerged therefrom: (i) None of the private players of UP has quoted a basic price below Rs. 35000 per KL. (ii) There is a price band of Rs. 1000 (between Rs. 35000 to 36000 per KL) in which all the parties have quoted. The quote of Rs. 37500 by Upper Ganges was accepted as a non-serious in the statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce their prices to the level of Rs. 33.70 during the course of negotiation. (xii) Thus, the benchmark price for supply of ethanol in tender of January 2013 was found to be a price around Rs. 33 per litre. 244. Further, the bidders who participated in the tender could not explain satisfactorily the basis of the prices quoted by them. In this regard, the Commission also notes from the comparison chart of cost of production vis-à-vis the prices quoted by the bidders, as tabulated by the DG, wherefrom it is noticed that the prices quoted by the bidders had no relation with the cost of production. For ready reference, the comparison chart of cost of production is noted below: 245. Furthermore, it remains unexplained as to why none of the bidders quoted a price below Rs. 35 per litre. This pricing pattern, when juxtaposed with the quantitative pattern of the bids, further reinforces the inevitable conclusion that the bidders ensured inter se that there should be no cross-cutting in terms of pricing and quantity. Such arrangement was facilitated by the platform provided by ISMA and signals provided by EMAI, which will be dealt with in the later part of this order. 246. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.16/per KL. The freight charges have been quoted at Rs. 925/- per KL by both the parties. DSM has its factory at about 150 Km and Shamli at about 270 Km from Aonla depot. Another bidder, Simbhaoli which has its factory at a distance of about 175 km, quoted Rs. 1824/as freight charge. The reason for quoting exactly identical freight charges of Rs. 925/- when there is a difference of more than 100 km in distance has not been explained by the companies. Najibabad Depot At Najibabad Depot, DSM and Upper Ganges have quoted Rs. 725/- on account of freight charges and their NDC at Rs. 41,850.16 was exactly identical. Other bidders like Uttam Sugars which has its factory at lesser distance than DSM and Upper Ganges quoted Rs. 875/- as freight charges. Further, it is submitted by DSM that they have paid actual freight charges of Rs. 659 to Rs. 689. There is no explanation as to how the freight charges and basic charges of two competitors matched exactly. Partapur Depot At Partapur Depot, Meerut the NDC of three bidders viz. DSM, Mawana and Shamli matched at Rs. 41850.16 per KL. The figure of freight charges mentioned by all the three bidders matched at Rs. 750/- per KL. The distanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibition on participating in anticompetitive agreements and bid-rigging and the penalties which infringers may incur are well known, it is normal for such practices and agreements to take place in a clandestine fashion, for meetings to be held in secret, and for associated documentation to be reduced to a minimum. The Commission in this regard notes that in respect of cases concerning cartels which are hidden or secret, there is little or no documentary evidence and the available evidence may be quite fragmentary. The evidence may also be wholly circumstantial. It is therefore often necessary to reconstitute certain details by deduction. In most cases, the existence of an anti-competitive practice or agreement must be inferred from a number of coincidences and indicia, which, taken together, in the absence of any other plausible explanation, may constitute evidence of infringement of the competition law. In the present case, the material on record clearly establishes that the bidders have acted in a collusive and concerted manner while quoting prices and quantities. In the absence of any logical or plausible explanation offered by the parties, the impugned conduct of the bidders whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 257. At this stage, the Commission reiterates that though the aforesaid bidders of Gujarat and Andhra Pradesh were not specifically named as Opposite Parties in the Information, their details were mentioned in the Information filed in the Case No. 21 of 2013. Furthermore, the direction issued by the Commission vide its order passed under Section 26(1) of the Act did not restrict the scope of the investigation to any particular State. In this view of the matter, no fault can be found with the DG's findings qua such bidders in respect of States of Gujarat and Andhra Pradesh, and the objection taken by the parties that the DG acted beyond the mandate given by the Commission, is without any basis and the same is rejected. Needless to add, such parties were forwarded copies of investigation reports and were also accorded opportunity of hearing and in these circumstances, the Commission is of the opinion that no jurisdictional error has been committed by the DG, nor any breach of principles of natural justice is observed. 258. Some of the Opposite Parties during the course of arguments on the DG Reports made specific criticism on the ground that the DG examined producers of UP leavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted the same basic price of Rs. 41,000/- per KL. However, bid price for NDC submitted by different parties was found to be different. Further, out of the abovementioned four parties, only Ajinkyatara Sahakari Sakhar Karkhana Limited made supply of ethanol to OMCs. Written responses and depositions of the parties could not lead the investigation to establish any coordination or agreement amongst the aforesaid four bidders for Loni depot as well. Accordingly, no case of contravention of the provisions of Section 3 of the Act is made out against any of the bidders who submitted their bids in respect of the various depots located in State of Maharashtra. 262. Having examined the conduct of the bidders across States (UP, Gujarat, Andhra Pradesh and Maharashtra) and having found the bidders of UP, Gujarat and Andhra Pradesh to have indulged in bid rigging, the Commission deems it appropriate to examine the role of ISMA/EMAI and NFCSF in facilitating the bid rigging. 263. To examine the role played by ISMA, it is noted that immediately after the Press Release dated 22.11.2012 in respect of the decision of CCEA regarding change in pricing mechanism, ISMA had convened meetings of etha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... length and recorded their statements in extenso in the investigation report. 269. On a perusal of their testimonies, it emerged that no specific details of meetings were given by Shri Abinash Verma, D.G., ISMA on the pretext of having no record. It was also claimed that no formal meeting could be conducted as scheduled. When the companies who participated in the tender have confirmed that they attended the meetings convened by ISMA, the statement of Mr. Abinash Verma is found to be evasive and untrue. There can be no reason to hide the facts about the meetings except that the ISMA wanted to hide the details of these meetings of ethanol manufacturers from the Commission. Further, any specific, cogent and convincing reason could not be given by Shri Verma as to why a meeting of ethanol manufacturer members was called by ISMA at the first place, when the member companies were themselves competent enough to deal with the tender process. He has also not been able to give any convincing explanation in respect of necessity and requirement of calling the executives of Bajaj Hindusthan, a non-member to the meeting convened in the office of ISMA. 270. It is noticed that the meetings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect facts. Shri Verma could only state that there was no restriction on the Association for meeting any sugar company which is not member of ISMA. It was stated by Shri Thakur in response to Question No. 23 of his statement dated 15.04.2015 that since Bajaj Hindusthan Limited was one of the largest manufactures of ethanol in the country, it was thought fit by Shri Verma and Shri Thakur to invite Bajaj in the meeting even though the said company was not a member of the Association. However, Shri Thakur could not answer or recall whether Shri Amit Agarwal or Shri J.P. Shah of Bajaj, who were specially invited, attended the aforesaid meetings of ISMA on 06.12.2012 or 27.12.2012. The extent of non-cooperation of Shri Thakur can be inferred from the fact that in his statement in answer to Question No. 29 posed by the DG, he stated that he did not remember whether any representative from Bajaj or any other sugar mills was present in the said meetings convened by ISMA. He went on to state that - "I cannot say about any particular person whether he attended ISMA office or meeting on that particular day". His answers to question Nos. 29 to 35 are found to be evasive. The investigation fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dders must operate in a symmetric, syncretic and aesthetic way all the time. More often than not, every attempt would be made by the participants to hide their coordinated behavior and it would be only on a few occasions when the authorities may be able to gather evidence of the entire concerted behavior. More often than not, participants in a cartel would try to mislead the Authorities by breaking the patterns of coordinated action from time to time in order to create a facade of competitive scenario when none exists. In such a situation, few instances itself would indicate a smoking gun and which would unfold the entire conspiracy alongwith other factors. This is amply exemplified in the present matter when the entire evidence is examined and assessed in an holistic manner. Same is true for various explanations given by different bidders in respect of the quoted bid price and the quantities. 275. In view of the above and also considering the past history of ISMA in facilitating concerted bidding in respect of the tenders floated by OMCs, as recorded by the DG, the Commission has no hesitation in holding that ISMA was actively involved with the bidding parties during the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion can be recorded against it. Neither the Informants could point out any such material against NFCSF wherefrom any infringing anti-competitive conduct could be attributed to it. Having examined the material on record, the Commission is satisfied that no anti-competitive role can be attributed to NFCSF in manipulating the bidding process. 281. In terms of the provisions contained in Section 3(1) of the Act, no enterprise or association of enterprises or person or association of persons can enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. Section 3(2) of the Act declares that any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void. Further, by virtue of the presumption contained in sub-section (3), any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cert whether or not formal or in writing or intended to be enforceable by legal proceedings. The definition, being inclusive and not exhaustive, is a wide one. An understanding may be tacit and the definition under Section 2(b) of the Act covers even those situations where parties act on the basis of a nod or a wink. The Commission notes that the Act envisages civil liability. Thus, the standard of proof required to prove an understanding or an agreement would be on the basis of 'preponderance of probabilities' and not 'beyond reasonable doubt'. There is rarely any direct evidence of action in concert and in such situations, the Commission has to determine whether those involved in such dealings had some form of understanding and were acting in co-operation with each other. In light of the definition of the term 'agreement', the Commission has to assess the evidence on the basis of benchmark of preponderance of probabilities. 286. Applying the aforesaid legal test to the evidence detailed in the present case, the Commission is of the considered view that the bidders through their impugned conduct have contravened the provisions of Section 3(3)(d) read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited v. Competition Commission of India & Anr., Civil Appeal No. 2480 of 2014 decided on 08.05.2017. One of the issues which fell for consideration before the Hon'ble Supreme Court in this case was as to whether penalty under Section 27(b) of the Act should be imposed on total/entire turnover of the offending company or only on "relevant turnover" i.e. relating to the product in question? 291. After referring to the statutory scheme as engrafted in Section 27 of the Act and analysing the case law at length, the Hon'ble Supreme Court opined that adopting the criteria of 'relevant turnover' for the purpose of imposition of penalty will be more in tune with ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties. While reaching this conclusion, the Hon'ble Supreme Court recorded the following reasons: When the agreement leading to contravention of Section 3 involves one product, there seems to be no justification for including other products of an enterprise for the purpose of imposing penalty. This is also clear from the opening words of Section 27 read with Section 3 which relate to one or more specified products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on record, the Commission is of the considered opinion that Government of India introduced EBP Programme keeping in mind the beneficial effects that such a programme will have on the agricultural sector as well as towards the country's environment footprint. However, the collusive conduct of the bidders not only tried to stultify the flagship programme of the Government but also acted to the detriment of larger national interest. 297. On a careful consideration of the nature of the contraventions, the Commission decides to impose penalty on sugar mills at the rate of 7% of their average relevant turnover of the preceding three financial years arising out of sale of ethanol. The total amount of penalty is worked out as follows: 298. Similarly, the Commission decides to impose penalty on trade associations (ISMA/EMAI) at the rate of 10% of their average receipts of the preceding three financial years. The total amount of penalty is worked out as follows: 299. Accordingly, the Commission imposes monetary penalties upon the parties as detailed hereinabove for contravention of the provisions of Section 3(1) read with Section 3(3) of the Act, as noted in the order. 300. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , be noted that the Commission vide its order dated 16.02.2016 rejected the application moved by Dhampur seeking cross-examination which was not only filed belatedly but also did not conform to the directions of the Commission. While rejecting the plea of Dhampur seeking cross-examination, the Commission observed as follows: "....... Besides, except giving a list of 14 witnesses, the Applicant has neither specified the relevance of the statements made by such persons in the findings of the DG nor otherwise made out any ground for seeking cross-examination as directed by the Commission. As such, the application is not in the manner directed by the Commission and the same deserves to be rejected." 304. Thereafter, Dhampur moved yet another application dated 04.03.2016 seeking modification of the aforesaid order. The Commission after perusing the application and hearing the counsel for Dhampur vide its order dated 29.03.2016 observed that the learned counsel appearing for Dhampur could not point out specifically any portion of the depositions on which the request for cross-examination was made. Except making general submissions and seeking parity without complying with the directio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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