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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 ..... presumption of appreciable adverse effect on competition is not applicable in respect of agreements entered into by way of joint ventures if such agreements increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services by virtue of the proviso engrafted to Section 3(3) of the Act. In the factual matrix of the present case, OMCs have demonstrated efficiencies resulting from the joint tendering process and in the absence of any rebuttal thereto or any other material available on record, the Commission has no hesitation in holding that no case whatsoever has been made out against OMCs of contravention of the provisions of Section 3 of the Act due to the impugned act of floating a joint tender. Such a system is beneficial to suppliers and all other stakeholders as it has demonstrable efficiency in improving the production and distribution of ethanol in an equitable manner. Before concluding on this count, the Commission is constrained to note the brazen conduct of India Glycols Limited in laying repeated challenges to the joint tendering process which was evidently adopted by PSU OMCs in order to avoid multiplicity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordination amongst ethanol manufacturers of UP could have been successful without Bajaj being a party to such concerted effort. Such actions coupled with evasive responses of ISMA representatives lead to inescapable conclusion that ISMA acted as fulcrum to the whole arrangement - 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 period of the tender of January 2013. The evidence adumbrated hereinabove establishes that ISMA has violated the provisions of Section 3(3)(a), 3(3)(b) read with Section 3(1) of the Act. 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 Section 3(1) of the Act by acting in a collusive and concerted manner which has eliminated and lessened the competition besides manipulating the bidding process in respect of the impugned tender floated by OMCs - the Commission holds that the bidders who participated in respect of the depots located ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ender 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 Limited (BPCL) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation Report to the Commission 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mills of Gujarat and 2 sugar mills of Andhra Pradesh) apart 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement by PSU OMCs for Ethanol Blended Petrol (EBP) Programme. However, as no gazette 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken with regard to commercial matters such as production targets or price bids/quantities to be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DG showed that the members of the association had in fact supplied higher quantity of ethanol to private parties (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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. Hence, the same are summarized together. 42. These OPs are cooperative societies registered under the Gujarat Co-operative Societies 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat was a mere coincidence and such coincidences did not contravene any of the provisions of the Act. 49. It was further submitted that the OPs 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there was a cartel and/or agreement to supply ethanol at an agreed price, it could not be below the then prevailing market prices and such a consensus could not 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 caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her competitors or associations and it did not attend any of the ISMA meetings inspite of being its member. 61. It was further clarified that, total production of ethanol by OP was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the quantities for which these prices were quoted differed. The DG erred in taking into consideration basic prices quoted by both the parties which were for different volumes of ethanol. If the 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 benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of Rs. 70 to Rs. 90 per litre which was almost double the domestic rates. 75. With regard to Net Delivered Cost, it was submitted that as per the tender process, the bidders were required to quote basic price 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation for similar bids would be a mere coincidence. 82. With regard to the allegation of the DG that Bajaj quoted identical bids, it was submitted that Bajaj bid in 10 depots and matching NDC was present only in one of 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 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard were merely speculative as no recorded minutes of the meetings of ISMA for the whole period of investigation had been cited in the Investigation Report. 88. With regard to call records between Bajaj employees and ISMA office 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 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for bidders in UP to cartelize, was denied. It was submitted that though the total requirement of these depots was approximately 40 crore litres, the offered quantity was only about 33 crore litres, however the contracts were awarded for about 26 crore 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. It was stated that the price of ethanol at Rs. 27/- was interim price fixed by the Government (CCEA) with a promise to provide final price. However, since the final price was not declared, the price at which ethanol was supplied during the entire four year 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. Finall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tender and called for a re-tender. 106. Moreover, it was submitted that it was upto OMCs to place an indent for supply of quantities as even after allocation of quantities, such quantities were not confirmed, as stated above. To buttress the submission, it was stated that 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 abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion capacity, balance quantity was to be supplied by other L2, L3 etc. bidders. Hence, OMCs entered into negotiations with the answering OP and only one unit of Simbhaoli i.e. Chilwaria Distillery in UP matched the price offered by KSCM for supplying the balance quantity of ethanol to Kanpur and Lucknow 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 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential revenue of Rs. 125.60 crore through supply to UP depots had it matched OMCs' benchmark price in all 6 depots at which it participated. At the allegedly cartelized margin of Rs. 1.5 per litre, this worked out to a mere Rs. 2.34 crore as against a total revenue of Rs. 1488.61 crore of the company in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and only a few members came to ISMA office and that too at different times. 127. Further, reliance by the DG upon call data records of Shri G.K. Thakur of ISMA with bidders just before closing of the tender to base finding of cartelization, was also challenged. It was submitted that apart from the number of events affecting 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. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the 13 calls made by Shri G.K. Thakur, ISMA to Shri Dilip Seksaria, Balrampur, 8 calls were made either prior to the issuance of the tender or after the date of submission of bids by Balrampur in the tender on 27.01.2013. For the remaining calls, it was pointed out that Balrampur regularly interacted with ISMA in relation to industry 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quoted price was not the final awarded price. 138. From a comparative analysis of base price of UP, Tamil Nadu and Maharashtra, it was submitted that both Maharashtra and Tamil Nadu had higher base price in comparison to UP. Analysis of the final price of Maharashtra and Tamil Nadu, decided post-negotiation, highlighted the fact that the same 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to any discussion relating to subject tender. 147. From the cross-examination of Shri Uday M. Gore, the Chief Operations Manager of BPCL and the industry coordinator on behalf of OMCs, it is seen that as per the CCEA guidelines issued on 22.11.2012, the procurement of ethanol was to be decided by market determined forces. Accordingly, the finalization 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant period were between Rs. 26 to 28 per litre, was incorrect as RS and SDS were two different products altogether and the prices were also different. The price of RS during the relevant period was Rs. 32 (approx.) as per the statements made by the bidders before the DG. It was also pointed out that no CENVAT Credit was allowed on RS and the finding of the DG in this 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged by the DG. 159. It was stated that the answering OP was regularly making supply of SDS to the Informants/chemical manufacturers and the rates were different for different buyers depending on the quantity purchased, period of purchase, production, prevailing market price, duration of supply, location of plant, freight etc. 160. It was also stated that the OP was not a member of EMAI 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 27.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst it. Replies/objections/submissions of Kisan Sahkari Chini Mills Ltd. (KSCM) 167. The learned counsel appearing on behalf of KSCM supported the findings of the DG report as no finding of contravention qua it was recorded. Replies/objections/submissions of Uttam Sugar Mills Limited (Uttam Sugar) 168. At the outset, it was submitted that the DG's findings against Uttam Sugar were bereft of any supporting 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, it incurred penalties with respect to the said tender. 175. In sum, it was submitted that the DG's findings failed to establish any contravention of the Act by Uttam Sugar. Accordingly, it was prayed that Uttam Sugar ought to be exonerated from the present proceedings. Replies/objections/submissions of Dalmia Bharat Sugar Industries Ltd. (Dalmia) 176. The DG Report failed to identify or substantiate the existence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the tender. The quantity of 4,500 KL constituted only 18.75% of Dalmia's total installed capacity and the same was quoted due to past failure to deliver as per the tendered quantity contained in those tender documents as a result of shut down of its sole distillery by the UP Excise Authorities. It was pointed out that under the previous tender, Dalmia had to supply only 5,500 KL, which it failed to supply. Further, as a result of this 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re as the basic price for the purpose of placing its bid under the terms and conditions of the tender. 182. Furthermore, the DG ignored the fact that the ex-factory cost of production of ethanol, as deemed to be appropriate by the DG, was without inclusion of costs for procurement of molasses, cost of packaging, overhead expenses, cost of electricity, etc. It was submitted that while determining the basic price of ethanol to be quoted for the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by OMCs'. Thus, despite acknowledging the existence of the forces of demand and supply, the DG Report continued on its pre-decided disposition to return a finding of collusion against the ethanol manufacturer(s) and their association(s). 188. Further, the DG based its findings on identical prices quoted by some of the bidders (Bajaj, Dhampur, Upper Ganges/Oudh Sugars, Mawana, Sir Shadilal-Shamli) for some of the depots. In fact, post the analysis of 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives of trade associations i.e. to voice the concern of the industry against the Government and other stakeholders. The DG Report failed to consider that the pressure being applied by industry association(s) was part of their legitimate role as industry association of ethanol manufacturers as well as a representative of the interests of ethanol manufacturers especially in light of the fact that losses were being incurred to the tune of Rs. 5 per litre by the ethanol manufacturers. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two issues require determination in the present cases: i. Whether the joint tender floated by OMCs is in violation of provisions of Section 3(1) read with Section 3(3) of the Act? ii. Whether the tender floated on 02.01.2013 by PSU OMCs was rigged by sugar mills/ISMA/EMAI/NFSCF in contravention of the provisions of Section 3 of the Act? Issue No. I Whether the joint tender floated by OMCs is in violation of provisions of Section 3(1) read with Section 3(3) of the Act? 205. Before examining 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y BPCL on behalf of OMCs - as the coordinator of the tender process. Through the joint tender, OMCs invited sealed tenders under the two bid system i.e. technical bid and price bid from ethanol suppliers. The supply was to be made available to various depots/terminals of OMCs across the country for a period of one year w.e.f. 01.03.2013. The Informant - India Glycols Limited-, has alleged that OP- 1 to OP-3 in Case No. 21 of 2013 i.e. Indian Sugar Mills Association (ISMA), National Federation of Cooperative 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 understandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders thereafter may only be able to procure the left over quantity, if any. Thus, such a mechanism would have led to more market imperfections due to the rational expectation on the part of the suppliers where the producers and suppliers use past events to predict future business operations. Hence, the remaining quantity may demand higher price in accordance with basic economic theory of demand and supply. In such a scenario, the other OMCs might not be able to procure even the available ethanol in the market. In fact, 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 opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing Case No. 14 of 2012 before the Commission. The Commission vide its order dated 26.07.2012 closed the case finding no violation of any of the provisions of the Act. Issue No. II Whether the tender floated on 02.01.2013 by PSU OMCs was rigged by sugar mills/ISMA/EMAI/NFSCF in contravention of the provisions of Section 3 of the Act? 220. Before analyzing the bidding pattern in respect of the impugned tender of 2013 floated by OMCs for procurement of ethanol, it is observed that earlier the Government of India fixed price 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmations. It was contended that the DG had unilaterally impleaded such companies without any direction of the Commission and issued probe letters seeking replies and appearance. It was further submitted that only the Commission can pass orders for impleadment or discharge of a party from the case and the DG possesses no such power or authority. As there was no order passed by the Commission to implead such OPs, the findings of the DG qua them must be set aside. 225. The Commission has examined this preliminary/jurisdictional issue in light of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r bidders who participated in the tender issued by OMCs in January, 2013 in violation of the provisions of Section 3(3) read with Section 3(1) of the Act, an analysis of the bid data collected by the DG with respect to the said tender has been undertaken. It is observed that bids for supply of ethanol were invited for 13 depots located across Uttar Pradesh viz., Allahabad, Aonla, Baitalpur, Banthra, Gonda, Kanpur, Karari/Ambabai (Jhansi), Lucknow, Mathura, Mughalsarai, Najibabad, Partapur (Meerut), Tundla and 16 bidders viz., Bajaj, Balrampur, Dalmia, Dhampur, K.M. Sugar, K.S.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be identical. (v) At some of the depots the Net delivered cost are also found to be exactly identical. (vi) The quantities quoted by the bidders in UP almost matched with the quantity required at almost every depot. (vii) There were 13 private players who participated in 13 depots of UP, yet the total quantity offered by the players was close to the total required quantity. (viii) At some of the depots like Kanpur, Mathura where there were 8 bidders, still the offered quantity clinically matched with the required quantity. 239. On a closer examination of the behavioral conduct of the bidders 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no co-relation existed between the quantities quoted in the current tender and the supplies made by the respective parties in previous years. This only strengthens the collusive arrangement entered into by the bidders in respect of the supplies to be made at the depots located in UP. 242. The afore-detailed pattern of bidding is indicative of concerted understanding amongst the bidders. In this regard, the Commission further examined as to whether there was any agreement amongst the bidders on a particular price band. From the data analysed in the earlier part of the order in respect of the depots located 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. 350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales get Cenvat credit which means the net realisation from ENA was about Rs. 2 per litre lower than the sales price. This makes the net realised sales price of ENA at the time of tender to be Rs. 31 per litre. (x) Considering the price of Rs. 34/per litre quoted by KSCM, the calculation of Rs. 33/- per litre as a benchmark price was further justified for analysing the competitive price for the purpose of tender. It is also noted that KSCM further agreed to reduce the prices during negotiation upto Rs. 33.70 per litre. (xi) It is also noted that the other bidders in the depots where KSCM had participated agreed to reduce 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- -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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of Rs. 925/- Thus, there was no real basis or correlation between the freight quoted and the actual freight while submitting the figures of freight charges in their respective bids by the bidders. The fact that two main components of NDC being basic price and freight charges were not based on any real working or calculations and yet they were exactly identical in the case of a number of bidders cannot be accepted as a mere coincidence. Similarly the analysis of other depots where identical NDC has been quoted by the bidders has revealed the same result. Aonla Depot At Aonla depot DSM and Shamli have quoted NDC of Rs. 42,050.16/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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted a detailed investigation after examining the bidding patterns of various depots. In these circumstances, the plea of some of the parties that the DG cherry picked only few depots and bidders, is not only untenable but has no basis in law or in facts. The infringing bidders can derive no sustenance from the fact that no collusive conduct was found or was otherwise present in respect of the remainder of the depots or the bidders. 250. It has also been argued by some of the parties that there is no direct evidence of collusion and the entire finding of the DG is just based on circumstantial evidence. The Commission notes that since prohibition 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 who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the parties have not been able to give any plausible justification for similarities in basic price as well as the NDC. The freight charges quoted by them were also noted by the DG to be without any basis. There was no earlier discovered price which could have resulted in similarity in the rates of all the bidders. No plausible explanation was furnished by the bidders in respect of identical pricing. 256. In view of the above, the Commission is of the considered opinion that similarities upto decimal figures cannot be an outcome of a price discovered through a competitive bidding process but is the result of collusive and concerted behavior of the parties. 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 bidd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bidding pattern and submissions/depositions of bidders in respect of the various depots (10) where bids were submitted in State of Maharashtra, the Commission is of the considered opinion that, unlike the bidding pattern (prices and quantity) in UP and Andhra Pradesh, bids for net delivered cost were not similar in respect of such 10 depots. In so far as Loni depot is concerned, basic price of few bidders matched. It is observed that Ajinkyatara Sahakari Sakhar Karkhana Limited and Mumbai Fabrics Private Limited quoted the same basic price of Rs. 40,000/- per KL whereas Raosahebdada Pawar Ghodganga Sahakari Sakhar Karkhana Ltd. and The Malegaon Sahakari Sakhar Karkhana Ltd. had 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii) Seksaria- Shri Ramesh Chandra Singhal and Shri B.P. Agarwal viii) KM Sugars- Shri B.M. Shrivastava ix) Mawana - Shri Rajesh Dhingra x) Dalmia Bharat- Shri Gopendra Singh xi) Sir Shadilal-Shamli - Shri Manoj Goyal xii) Uttam Sugar - Shri Sanjay Govil 267. The DG also obtained e-mails of Shri G.K. Thakur, Director-Policy (Sugar By-products), ISMA [the then Dy. Head-Policy (Sugar By-products)] from the service provider. It appears from the e-mails that Shri Thakur sent e-mails to ethanol manufacturers in respect of meetings to be held on 06.12.2012 and on the subsequent dates. 268. The DG also examined on oath Shri Abinash Verma, Director General, ISMA and Shri G.K. Thakur, at 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of EBP Programme to which he replied in negative. The above facts coupled with the conduct of ISMA in hiding the details of meeting leads to the conclusion that the ISMA was taking an active role in providing a platform to all the competing bidders of UP for discussion and coordination amongst themselves in order to obfuscate the whole bid process of OMCs. 271. It is also noted that ISMA has invited Bajaj Hindusthan, a non-member, to the meeting. Neither Shri Verma, DG nor Shri G.K. Thakur, could give any logical explanation in respect of invites to Bajaj. The replies of Shri Verma and Shri Thakur have been found to be evasive and it appeared that they were not forthcoming to disclose the truth and correct 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 Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of submission of bids i.e. 28.01.2013, Shri Thakur was found to be in communication with such representatives of ethanol manufacturers. Crucially, the DG noted that the interactions stopped after 28.01.2013. 273. Further, the Commission finds it strange that ISMA does not maintain register of visitors and the records of communications. No register of attendance of members attending the meetings of ISMA were produced. 274. Some of the bidders claimed that they have not attended the meetings convened by ISMA and also submitted that there was no communication of their representatives with their competitors during the relevant period. This plea is of no assistance to the parties. It is not necessary that all the bidders 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 creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y based in Maharashtra. The members of EMAI were found to have followed the lead given by the President, EMAI in his press statement that the price of ethanol should be more than Rs. 40/- litre. It also emerged that EMAI conducted two meetings (on 09.01.2013 and 21.01.2013) after the announcement of tender where all the members were called to Mumbai. 279. On a careful perusal of the conduct of EMAI as noted hereinabove, there is no doubt that the behavior of the bidders was influenced by EMAI and such conduct of EMAI is found to have contravened the provisions of Section 3(3)(a) read with Section 3(1) of the Act. 280. So far as the conduct of NFCSF is concerned, the DG did not find any evidence on which a finding of contravention 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct of the OPs had virtually sabotaged the Government of India's flagship programme which was conceived to have beneficial effects on the agricultural sector besides improving the environment footprint. 284. As the bidders are sugar companies engaged in similar business of manufacturing of sugar and its by-products, and are therefore, operating at the same level of the production chain, allegations of anti-competitive agreements, decisions or practices among them squarely stand covered within the ambit of Section 3(1) read with Section 3(3) of the Act. 285. Further, it may be noted that the definition of 'agreement' as given in Section 2(b) of the Act requires, inter alia, any arrangement or understanding or action in concert 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3(1) of the Act. Further, the impugned conduct of ISMA is found to have violated the provisions of Section 3(3)(a)/(b) read with Section 3(1) of the Act. Also, the conduct of EMAI is held to be in violation of the provisions of Section 3(3)(a) read with Section 3(1) of the Act by providing their platforms to sugar mills in facilitating rigging of impugned tender. 289. Accordingly, the sugar mills and ISMA/EMAI are directed to cease and desist from indulging in conduct that has been found to be in contravention of the provisions of the Act, as noted above. 290. So far as imposition of monetary penalty is concerned, the Commission deems it apposite to refer to the recent decision of the Hon'ble Supreme Court of India in Excel Crop Care Limited 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the offence and the same must be determined after having due regard to the mitigating and aggravating circumstances of the case. The Commission is also guided by the judgment of the Hon'ble Supreme Court of India in Excel Crop case (supra) which enunciates the principle of proportionality. Proportionality achieves balancing between two competing interests: harm caused to the society by the infringer which gives justification for penalising the infringer on the one hand and the right of the infringer in not suffering the punishment which may be disproportionate to the seriousness of the Act on the other. 296. In this regard, the Commission has examined various other pleas urged by the parties on quantum of penalty. Having considered the material available 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 na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depots located in Maharashtra. 302. The Commission also finds no merit in the plea raised by Dhampur that it was denied opportunity to cross-examine the witnesses whose statements were relied upon by the DG. In this regard, the Commission notes that vide order dated 06.10.2015, liberty was granted to the parties who were desirous of cross-examining the witnesses to file appropriate applications containing the details of the (i) witness sought to be cross-examined; (ii) relevance of the statements made by such person in the findings/recommendations of the DG; and (iii) the grounds on which cross-examination of witness(s) was sought for. The Commission also directed that applications, if any, for cross-examination of witness(s) shall be made within a week. 303. It may, however, 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 neit ..... 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