9911796707
TMI Blog2024 (11) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... on report is a few instances of quotation of identical prices by OP-11 and OP-19 in the Impugned Tender, and exchange of calls by them as well as by key officials of certain other OPs with Shri GK Thakur, Director of ISMA, during the tender period - It is no longer res integra that price parallelism cannot be the sole criteria to establish a cartel. Evidence of parallel pricing must be supplemented with plus factors showing that alleged conduct is conscious and not the result of independent business decisions. In the present matters, the plus factors on record to supplement price parallelism by 2 OPs, is exchange of a few calls between the OPs with the representative of the industry association ISMA, which may have been to understand the nuances of the Impugned Tender as it ushered a novel way of tendering process. The investigation has not brought out sufficient evidence on record for the Commission to arrive at a finding of contravention of the provisions of the Act against any OP in the present matters - It is made clear that all information used in the present order is for the purposes of the Act and as such, in terms of Section 57 of the Act, does not qualify for grant of conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otaraju, Senior Advocate with Ms. Ankita Sharma, Ms. Shiwani Tushir, Mr. Ayush, Mr. Rajat Srivastava and Mr. Laut Mohan, Advocates and Ms. Bharti Balaji of Indian Sugar Mills Association For Opposite Party No. 2 National Federation of Co-operative Sugar Factories : None For Opposite Party No. 3 Ethanol Manufacturers Association : Mr. Bhushan V. Mahadik, Mr. Ranjit Raut and Ms. Pallavi Pukale, Advocates For Opposite Party No. 4 Bharat Petroleum Corporation Ltd. : Mr. Vishal Singh and Mr. Shiv Sapra, Advocates For Opposite Party No. 5 Hindustan Petroleum Corporation Ltd. : Mr. Vishal Singh and Mr. Shiv Sapra, Advocates For Opposite Party No. 6 Indian Oil Corporation Ltd. : Mr. Vishal Singh and Mr. Shiv Sapra, Advocates For Opposite Party No. 7 Bajaj Hindusthan Sugar Ltd. : Mr. A.K. Agarwal, Mr. Sanjeev Kumar Singh, Mr. Bhishm Pratap Singh and Mr. Mayank Bughani, Advocates For Opposite Party No. 8 Avadh Sugar Energy Ltd. (erstwhile Upper Ganges Sugar and Industries Ltd. and Oudh Sugar Mills Ltd.) : Mr. Pankaj Bhagat, Advocate with Mr. Shishir Agarwal, Senior Manager, Avadh Sugar Energy Ltd. For Opposite Party No. 9 Triveni Engineering and Industries Ltd. : Mr. Pranjit Bhattacharya, Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( ISMA ), National Federation of Co-operative Sugar Factories ( NFCSF ) and Ethanol Manufacturers Association ( EMA ), (ii) three Public Sector Undertakings ( PSUs ) Oil Marketing Companies ( OMCs ) namely Indian Oil Corporation Ltd. ( IOCL ), Bharat Petroleum Corporation Ltd. ( BPCL ) and Hindustan Petroleum Corporation Ltd. ( HPCL ), and (iii) 14 sugar mills of the State of Uttar Pradesh. Post Central Government notification dated 02.01.2013 mandating all OMCs to sell Ethanol blended Petrol ( EBP ) to achieve 5% Ethanol blending across the country, a joint tender dated 02.01.2013 ( Impugned Tender ) was issued by the above-mentioned three PSU OMCs for procurement of Ethanol , which is a by-product of sugar production. In the captioned matters, allegations pertain to price fixation and bid-rigging by various sugar mills, most of whom are members of the above-mentioned three associations, in the Impugned Tender were made. Other allegations in the nature of, inter alia, the sugar mills limiting the production of Ethanol to create artificial scarcity in the market were also levelled and it was also averred that joint tendering by the OMCs itself is anti-competitive. 2. Based on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheets and Profit and Loss Accounts and their 42 individuals were directed to file their income details including Income Tax Returns, for the Financial Years ( FY ) 2011-12 to 2013-14. 6. Thereafter, applications were filed by few OPs seeking cross-examination of certain witnesses whose statements had been relied upon by the DG during the course of its investigation. The Commission, after hearing the applicants, vide orders dated 16.02.2016 and 29.03.2016, allowed cross-examination of various witnesses by the applicants, and directed the DG to conduct cross-examination proceedings and submit a report. 7. The DG submitted its report on cross-examination on 21.09.2016. Upon consideration of the said report, the Commission, vide order dated 28.03.2017, forwarded electronic copies of the same to the Parties, giving them opportunity to file their suggestions/ objections, if any, thereto. 8. Subsequently, on 19.07.2017, 20.07.2017, 25.07.2017, 02.08.2017 and 22.08.2017, the Commission heard the Parties on the investigation report and the report on cross- examination, and decided to pass an appropriate order. 9. Vide order dated 30.10.2017, the Commission, in terms of the provisions conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aptioned matters, the parties shall be referred to as the follows: Sl. No. Name of Party Referred to as 1. India Glycols Ltd. IP-1 2. Ester India Chemicals Ltd. IP-2 3. Jubilant Life Sciences Ltd. IP-3 4. AB Sugars Ltd. IP-4 5. Wave Distilleries and Breweries Ltd. IP-5 6. Lords Distillery Ltd. IP-6 7. ISMA OP-1 8. NFCSF OP-2 9. EMA OP-3 10. BPCL OP-4 11. HPCL OP-5 12. IOCL OP-6 13. Bajaj Hindusthan Sugar Ltd. OP-7 14. Avadh Sugar Energy Ltd. (erstwhile Upper Ganges Sugar and Industries Ltd. and erstwhile Oudh Sugar Mills Ltd.) OP-8 15. Triveni Engineering and Industries Ltd. OP-9 16. Simbhaoli Sugars Ltd. OP-10 17. Dhampur Sugar Mills Ltd. OP-11 18. Balrampur Chini Mills Ltd. OP-12 19. Mawana Sugars Ltd. OP-13 20. KM Sugar Mills Ltd. OP-14 21. The Kisan Sahkari Chini Mills Ltd. OP-15 22. Uttam Sugar Mills Ltd. OP-16 23. Dalmia Bharat Sugar and Industries Ltd. OP-17 24. The Seskaria Biswan Sugar Factory Ltd. OP-18 25. Sir Shadi Lal Enterprises Ltd. OP-19 26. Sahakari Khand Udyog Mandali Ltd. OP-20 27. Shree Ganesh Khand Udyog Sahakari Mandli Ltd. OP-21 28. Shree Kamrej Vibhag Sahakari Khand Udyog Mandali Ltd. OP-22 29. Shree Mahuva Pradesh Sahakari Khand Udyog Mandali Ltd. OP-23 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and Net Delivered Cost ( NDC ) which is BP + Taxes and Fees applicable + Freight, and the L1 bidder was to be determined on the basis of NDC. 68 bidders from all across India participated in the Impugned Tender. 21. According to the tender conditions: 2. EVALUATION/ ORDER AWARD CRITERIA: a. b. c. d. The contract/ order for supply of Anhydrous Ethanol shall be awarded on location wise lowest net delivered cost basis. The reasonability of price shall be determined by the industry committee. e. Basis of quantity Allocation: 1. The location-wise lowest net delivered cost (NDC) will be determined for all the locations. 2. If the total of the location-wise L1 vendors offered quantity is more than 1.05 million KL, the order allocation will be as under: i. Among all the location-wise lowest bidders, we will select the bidder who is the lowest NDC among all and allocate his offered quantity for that location. ii. Among all the remaining location-wise lowest bidders, we will select the bidder who is the lowest NDC (next lowest after (i) above) among all and allocate his offered quantity to that location. iii. The above process will be repeated till the total quantity requirement of 1.05 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons, replies from the 14 named OP sugar mills of the State of Uttar Pradesh (who had participated in the Impugned Tender w.r.t supply to depots in Uttar Pradesh, Haryana and Punjab), costing details of these sugar mills, details of meetings and travels of their key persons, replies from the 44 other sugar mills who had participated in the Impugned Tender but not named as OPs in Informations filed, as well as recorded the statements on oath of 27 witnesses. 25. From the investigation report dated 17.07.2015, is noted that the primary evidences relied upon by the DG in the present matter are as follows: A. Against ISMA and sugar mills of Uttar Pradesh (i) Meetings of Ethanol Manufacturers dated 06.12.2012 and 27.12.2012 (rescheduled from 19.12.2012) convened by ISMA, where representatives of several sugar mills of Uttar Pradesh, including of OP-13 who is a non-member of ISMA but largest player in the market, were present. This is despite the fact that Annual General Meeting ( AGM ) of ISMA was already scheduled on 17.12.2012 (which was attended by promoters or senior officers of member companies). (ii) CDRs of Shri GK Thakur, Director of ISMA, of December 2012 and January 2013, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at collusion, like quoting of identical rates in previous tenders, pricing discussions etc. taking place in ISMA meetings etc. (xiii) Total quantity in the State of Uttar Pradesh being quoted i.e. 2.08 lakh kl being almost equal to the required quantity floated through the Impugned Tender i.e. 2.01 lakh kl, though the bidders capacity was almost 3 times the required quantity (includes 25% for RS/ SDS and ENA). Further, depot wise also, in the State of Uttar Pradesh, the difference between the quantity required by the OMCs and the quantity offered by the bidders was very narrow. (xiv) Many players not bidding for a depot despite being in close proximity to the same as well as far away bidders placing bids for amounts lower than nearer players. B. Against sugar mills of Gujarat (i) Quoting of identical BP and NDC to the last decimal point by 04 bidders at 01 depot and representatives of the bidders being unable to provide the basis for quoting the identical prices by their mills. Freight charges quoted by such bidders was also found to be without any basis. C. Against sugar mills of Andhra Pradesh (i) Quoting of identical BP and NDC to the last decimal point by 02 bidders at 01 depot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs as well as non- members regularly interacted with officials of OP-1 to discuss various policy issues having greater implications on sugar industry. As such, the DG ought to have analysed the CDRs pre December 2012 or post January 2013 also to analyse if there was any surge of calls during the tender period. 26.5 The present matters are nothing but vexatious litigation by IP-1. IP-1 filed the present matter to secure a business advantage as its strategy was to somehow obstruct supplies of alcohol to the OMCs and thereby cause a surplus availability of alcohol in the market, which would in turn result in sale of cheaper SDS to itself. IP-1 had earlier also filed Case No. 14 of 2012 before the Commission which was closed by the Commission vide Order dated 26.07.2012 passed under Section 26(2) of the Act and IP-1 had also challenged the EBP before the Hon ble Delhi High Court vide W.P. (C) No. 247 of 2015. The conduct of IP-1 is mala fide. Its own subsidiary Shakumbari Sugar Mills and Allied Industries Ltd. was a member of ISMA and had quoted the BP of ₹41/lt in the Impugned Tender and lost in the bid process. 26.6 There are sparse incidents of quotation of identical NDCs by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive agreements/ abuse of dominance . Had the OMCs observed cartelisation by the bidders, they would have taken recourse to such clause. However, they did not do so but rather accepted the bid prices quoted. 26.17 As far as supplementary investigation report is concerned, it can be seen that all sugar factories of Maharashtra had submitted the tender at BP higher than ₹40/lt. However, even though all the said bidders quoted price which was much higher than the competitive benchmark price calculated by the DG at ₹33/lt, none of them were found guilty by the DG. This clearly establishes that the investigation reports are biased and based on discrimination. Further, the DG, in its investigation report, had concluded that the behaviour of the bidders in the State of Maharashtra was impacted by the decision of EMA. The bidders of Maharashtra had also admittedly attended two EMA meetings on 09.01.2013 and 21.01.2013. However, no correlation has been found by the DG between the statement made by the President of OP-3 and the prices actually quoted by the Maharashtra mills, which varied between ₹35/lt and ₹48.01/lt. Only the association has been found violating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCEA Press Release dated 22.12.2012, however, since the notification never came, the said meetings were cancelled. 28.1.6 The Commission, however, notes that there is no record of any e-mail being sent to cancel the meetings dated 06.12.2012 and 27.12.2012, despite the fact that mills which were invited to the said meetings were from outside Delhi. On the other hand, there was a specific e-mail dated 17.12.2012 sent by Shri GK Thakur to cancel the meeting convened on 19.12.2012 and postpone it to 27.12.2012. As such, the Commission does not find merit in the argument put forth by the OPs. 28.1.7 Further, ISMA and the sugar mills of Uttar Pradesh have also argued that the meetings dated 06.12.2012 and 27.12.2012 never took place because of attendance of very limited members. 28.1.8 In this regard, it is noted by the Commission that the e-mail dated 17.12.2012 postponing the meeting dated 19.12.2012 to 27.12.2012 clearly mentions that the meeting dated 06.12.2012 took place. The contents of the said e-mail read as As decided in the last meeting held on 06th December 2012, the next meeting 28.1.9 Further, admittedly, the meetings dated 06.12.2012 and/ or 27.12.2012 were attended by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom the e- mail invite was sent, only a few attended the meeting. Further, as argued by the parties, the said meetings took place before the Impugned Tender was issued and the tender so issued was a novelty, being a first time e-tender and being a joint tender issued by 3 OMCs for 110 locations across India. 28.1.15 Hence, in the absence of any supporting evidence, it is difficult to assume that specific depot wise prices or quantities to be quoted in the Impugned Tender could have been discussed in the impugned meetings without knowledge of specifics of the tender or that any decisions could have taken place therein or consensus amongst all sugar mills could have been reached therein in light of limited attendance. The OPs have also argued that there is no record to show as to what actually transpired in the said meetings and that there is also no evidence to hint that prices or quantities were discussed in the said meetings. 28.1.16 In the matter of Rajasthan Cylinders (supra), the Hon ble Supreme Court of India also did not attach much weightage to scarcely attended meetings of competitors as evidence of cartelisation, though in that case the meetings had in fact been held durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom Shri GK Thakur interacted were mostly, the key persons who were involved in or who finalised the prices and quantities quoted on behalf of their respective companies, in the Impugned Tender. 28.2.2 When such representatives of the parties whose interactions with Shri GK Thakur had come on record were questioned by the DG, they stated that communications with representatives of ISMA were a regular course of action and not much can be read into the representatives of sugar mills having telephonic conversations with the Director of the industry association. 28.2.3 As per the OPs, in order to say that such frequent telephonic calls between the representatives of the OPs and Shri GK Thakur, Director of ISMA, were in furtherance of a cartel, the DG ought to have obtained the CDRs of Shri GK Thakur for preceding or at least subsequent few months to show a sudden surge, if any, in the telephonic calls made during the months of December 2012 and January 2013. However, no such exercise has been done by the DG. 28.2.4 In this regard, however, it is noted by the Commission that Shri GK Thakur, when asked by the DG if the representatives of Ethanol manufacturers communicated with him on tel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f OP- 17 Date Time Duration (In seconds) 04.01.2013 14:47 2 04.01.2013 14:47 119 (ix) Calls exchanged with Shri B.P. Agarwal, General Manager (Commercial) of OP-18 Date Time Duration (In seconds) 23.01.2013 13:56 168 (x) Calls exchanged with Shri Manoj Goel, Deputy General Manager of OP- 19 Date Time Duration (In seconds) 09.01.2013 14:06 2 22.01.2013 11:42 61 23.01.2013 15:56 85 23.01.2013 20:15 6 23.01.2013 20:17 163 27.01.2013 15:15 118 27.01.2013 15:00 424 (c) Calls exchanged after submission of bids by each OP: Again, such calls may not be of much relevance as there is no finding in the investigation report that price negotiations with the OMCs was also pursuant to a cartel. 28.2.6 From the above, it is evident that the representatives of OP-7, Upper Ganges Sugar Industries Ltd., OP-10, OP-11, OP-12, OP-13, OP-17, OP-18 and OP-19 exchanged several calls of substantial duration with Shri GK Thakur, Director of ISMA, during the relevant period of the Impugned Tender. As stated by Shri GK Thakur, such calls were not routinely exchanged. 28.2.7 Though it has not come on record as to what was discussed in such calls, none of the OPs have been effectively able to explain the discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member or any directions from the President of the Association to attend the same. 28.3.3 In view of the Commission, Shri GK Thakur, being the Director of ISMA, the largest association of Ethanol Manufacturers in India, had reasonable ground to attend the pre-bid meeting organised by the OMCs in respect of the Impugned Tender, which admittedly was a novelty, being a first time e-tender and being a joint tender issued by 3 OMCs for 110 locations across India. 28.4 E-mails recovered from the account of Shri GK Thakur 28.4.1 The Commission notes that in the investigation report, 06 e-mails recovered from the e-mail account of Shri GK Thakur, Director of ISMA, have been flagged as evidence of ISMA being involved in anti-competitive activities w.r.t. the Impugned Tender. 28.4.2 The views of the Commission upon each such e-mail, are as follows: (i) E-mail dated 22.01.2013 sent by Shri Raj Kumar Rawal of OP-12 to Shri GK Thakur inviting attention of Shri Dilip Seksaria of OP-12 and containing distance between distilleries of OP-12 and the OMC depots. With respect to the above e-mail, ISMA, in its objections/ suggestions to the investigation report, has explained that such e-mail was meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cartelisation in the Impugned Tender, can be drawn from such e-mail. (v) Letter dated 13.03.2013 from South Indian Sugar Mills Association seeking some information on difference in quantity offered as against required quantity by OMCs for depots located in the State of Andhra Pradesh. The above letter is of post bid submission date of the Impugned Tender, contains aggregated data of the industry and not of individual companies, requests quoted quantity and price information post tender, and has been sent by South Indian Sugar Mills Association to ISMA, sugar mills of which in general have not been found guilty of cartelisation by the DG. No adverse inference w.r.t. ISMA being involved in cartelisation in the Impugned Tender, can be drawn from such e-mail. (vi) Circular dated 23.11.2012 of ISMA to its members enclosing Press Release of CCEA. Evidently, the above circular simply informs the members of ISMA about the approval of EBP policy by CCEA, which press release was already in the public domain. No adverse inference w.r.t. ISMA being involved in cartelisation in the Impugned Tender, can be drawn from such e-mail. 28.4.3 Therefore, as per the Commission s above observations on e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that out of the 5 OPs who the investigation report states have quoted identical NDCs, 3 have only one single instance of identical prices out of multiple bid quotations made by them which might as well be a coincidence, while 2 have multiple such identical prices. 28.5.5 Further, of the 3 who have a single instance of quotation of identical bid, it is noted from the investigation report that neither of them ended up being L1 bidder at the depots where they had placed the identical bids. Also, they had eventually reduced their prices during negotiations with the OMCs and ended up being suppliers of Ethanol at these respective depots. 28.5.6 However, of the remaining 2 i.e. OP-11 and OP-19 who have been identified to have quoted identical bids at multiple depots, it is noted from the investigation report that OP-11 was the L1 bidder at Najibabad depot while OP-19 was at none. Further, OP-11 had reduced prices during negotiations with OMCs and ended up being supplier of Ethanol at one other depot (Mathura) whereas it refused to reduce its prices for the remaining 2 depots. On the other hand, OP- 19 reduced its prices during negotiations with the OMCs and ended up being supplier of Et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amli Distillery (OP-19) quoted identical freight charges of ₹950. (b) Najibabad depot Upper Ganges Sugar Industries Ltd. and OP-11 quoted identical freight charges of ₹750. (c) Allahabad depot Oudh Sugar Mills Ltd. and OP-14 quoted identical freight rates of ₹1,400. 28.6.2 From the above, the Commission notes that: (i) The quotation of identical freight rates at Aonla depot is despite difference in distance of distillery (150 km of OP-11 and 270 km of Shamli Distillery (OP- 19)) from the depot. (ii) The quotation of identical freight rate at Najibabad depot may not be of much consequence as the distilleries of the bidders were located in close proximity (60 km of Upper Ganges Sugar Industries Ltd. and 50 km of OP-11) from the depot. (iii) The quotation of identical freight rates at Allahabad depot is despite difference in distance of distillery (310 km of Oudh Sugar Mills Ltd. and 225 km of OP- 14) from the depot. 28.6.3 Apart from the above, it has also been observed in the investigation report that the freight charges quoted by different bidders at different depots were neither based on past payments being made to them (the OMCs were reimbursing transportation c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same has been accepted as a co-incidence and not construed as evidence of a cartel, thereby downplaying the importance of the BP. 28.7.4 Further, the difference between ₹35/lt ₹36/lt quoted as BP in the Impugned Tender by the OPs and ₹27/lt which was the ad hoc BP fixed for procurement in 2010 after 2.5 years is not a big difference, especially in light of the OPs bringing on record that the sugarcane prices from 2008-09 to 2012-13 went up by 100% (from ₹140/ quintal to ₹280/ quintal) whereas Ethanol price rose only by 24.15%. 28.7.5 It is noted from the record that the BP is arrived at by a bidder by determining the CoP of Ethanol and adding profit margin thereto. The CoP of Ethanol is stated to be based on the prevailing cost of other products i.e. RS (94.68 % v/v min 2), SDS (94.68% v/v mm), and ENA (95-96% v/v mm), and adding conversion cost to the same to reach at Ethanol (99.60% v/v mm). 28.7.6 It has been stated in the investigation report that the prevailing prices of RS/ SDS and ENA during the relevant period were around ₹26-28/₹lt and ₹31/lt, respectively. The OPs have argued that apart from adding conversion cost to the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements on oath given by representatives of certain OPs before the DG that the calculation of BP quoted by such OPs have been explained. Further, it is noted that similar reasoning given by representatives of the bidders of the State of Maharashtra for arriving at their BP has been accepted by the DG in the supplementary investigation report. 28.7.12 Therefore, the Commission is also not inclined to agree with the finding of the investigation that the BPs quoted by the OPs are not justified on the basis of their CoP. 28.8 Reduction in NDC during negotiations 28.8.1 The investigation report has also observed that private players who were L1 in the State of Uttar Pradesh did not, at all locations, reduce their prices during negotiations despite the fact that the OMC benchmark prices were lower than their quoted prices. However, on the other hand, OP-15, which had already quoted prices below benchmark prices at four locations (Kanpur, Lucknow, Aonla and Banthra), further agreed to reduce prices. 28.8.2 In this regard, it is noted from the record that firstly, at none of the depots, the OMCs purchased Ethanol at a rate above their internally fixed benchmark prices. Purchases were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (OP-7) was selected as L1, implying that its bid amount was lower than benchmark price fixed by OMCs. 01 out of 03 other bidders also agreed to supply at L1 s rate. Therefore, it is seen that the private players did reduce their prices during negotiations. Aonla Lowest bidder (OP-15) selected as L1 lowered its NDC by ₹224.72/ kl. 02 out of 04 other bidders who were private players also agreed to supply at OP-15 s negotiated rate. Therefore, it is seen that the private players did reduce their prices during negotiations. Banthra Lowest bidder (OP-15) selected as L1 lowered its NDC by ₹224.72/ kl. 01 out of 03 other bidders who were private players also agreed to supply at OP-15 s negotiated rate. Therefore, it is seen that the private players did reduce their prices during negotiations. Tundla Lowest bidder (OP-13) was selected as L1, implying that its bid amount was lower than benchmark price fixed by OMCs. 01 out of 03 other bidders also agreed to supply at L1 s rate. Therefore, it is seen that the private players did reduce their prices during negotiations. Najibabad Lowest bidder (OP-11) was selected as L1, implying that its bid amount was lower than benchmark pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bidders of the State of Uttar Pradesh, i.e.: (a) Bidders quoting identical prices of ₹21,500/kl for depots of Rajasthan and ₹22,000/kl for depots of Punjab in 2006-07 tenders of OMCs; (b) All bidders of the State of Uttar Pradesh quoting the BP of ₹27,000/kl or 27,500/kl in the 2009 tender (subsequently scrapped), with the exception of Shakumbari Sugar (subsidiary of India Glycols Ltd.) which quoted ₹21,500/kl; (c) Minutes of Meeting of ISMA dated 14.10.2009 which recorded The Committee reviewed the position regarding finalization of tenders issued by the Oil Marketing Companies (OMCs) for purchase of ethanol. Shri Narendra Murkumbi informed that he had a conference call with all the members of the Ethanol Promotion Sub Committee before the tenders were submitted in which several members participated. He was glad that the members generally quoted a price of Rs. 25/- per litre of ethanol ex-factory except in the case of two cases, where Rs. 21/50 per litre was quoted as per the earlier contract. He informed that the OMCs have approached the Ministry for revising the purchase price of ethanol upwards and as soon as a decision was taken, the OMCs would finalis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State of Uttar Pradesh, the difference between the quantity required by the OMCs and the quantity offered by the bidders was very narrow. 28.10.3 It has also been observed in the investigation report that many OPs did not bid for a depot despite being in close proximity to the same and far away bidders also placed bids for amounts lower than the OPs located nearer. They were also questioned regarding selection of depots by the DG during recording of their statements on oath. 28.10.4 Such irregularities led the investigation report to conclude that there was quantity allocation amongst the bidders of the State of Uttar Pradesh in the Impugned Tender since the justifications offered by them for selection of depots was not found credible by the DG. 28.10.5 The Commission however, notes from the investigation report that there is no evidence brought on record by the DG pointing towards quantity allocation amongst the OPs. Also, the DG while observing that the quantity offered by the bidders of Uttar Pradesh in the State of Uttar Pradesh was almost one-third of their actual capacity, has failed to take into account that the bidders of Uttar Pradesh also participated for depots outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also argued that the OMCs have not themselves alleged cartelisation in the Impugned Tender despite their submissions being on record and despite the existence of clause 35 for Anti- competitive agreements/ abuse of dominance in the Impugned Tender. Thus, when the evidence on record is viewed in this light, the Commission finds it difficult to make a case of cartelisation for contravention of the provisions of Section 3(3)(a) of the Act, against ISMA and the bidders of the State of Uttar Pradesh, in the present matters. Against sugar mills of Gujarat and Andhra Pradesh 28.15 Now, coming to the sugar mills of the State of Gujarat, the Commission notes from the record that the Impugned Tender had invited quotations for 06 depots (Hazira, Dumad/ Koyali/ Nandesary, Bareja/ Navegaon, Rajkot, Sabarmati/ Kaligam and Palanpur) in the State of Gujarat. 28.16 For those 06 depots, 06 bidders (OP-21, OP-22, OP-23, OP-24, Luna Chemical Industries Pvt. Ltd. and Shree Khedut Sahakari Khand Udyog Mandli Ltd.) submitted bids. OP-21 bid for Hazira, Dumad/ Koyali/ Nandesary, Bareja/ Navegaon and Sabarmati/ Kaligam depot, OP-23 bid for Hazira and Dumad/ Koyali/ Nandesary depot, while OP-22 and OP-24 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate at a distance of around 60 km from each other, and that their distance from the Rajamundry depot is also the same; therefore, quoting identical bids for this single depot cannot be viewed as an act of cartel. 28.25 As stated supra, it is no longer res integra that price parallelism cannot be the sole criteria to establish a cartel. Evidence of parallel pricing must be supplemented with plus factors showing that alleged conduct is conscious and not the result of independent business decisions. 28.26 Further, with respect to matching of quantity in the State of Andhra Pradesh, neither has Shree Renuka Sugars Ltd. been found guilty of being a part of the alleged cartel by the DG for quantity allocation, nor has the investigation report brought on record any actual evidence pointing towards quantity allocation amongst the concerned OPs. 28.27 As such, the Commission does not find the single instance of price parallelism sufficient evidence to prove contravention of the provisions of Section 3(3) of the Act by either OP-20, OP-21, OP-22 and OP-23 or OP-24 and OP-25. Against EMA 28.28 Business Standard publication 07.12.2012 28.28.1 The Commission notes that the article published on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issues have been addressed. OMCs will jointly review the Centre s decision and issue the tender if required. The price will be quoted in the tender, the official informed. 28.28.2 In this regard, EMA submitted before the Commission that it is necessary to appreciate exactly what statement was made by the President of OP-3 and the context in which the said statement was made. EMA explained that sometime before 05.12.2012, a reporter of Business Standard by the name of Shri Sanjay Jog made a telephone call to the President of OP-3 and asked for information with regard to the position of supply of Ethanol. The President assured him that a note would be sent to him giving the required information. On 05.12.2012, the Secretary forwarded a written note in Marathi to the said Shri Sanjay Jog by e- mail. The news item in Business Standard dated 07.12.2012 is based on the said written note sent to Shri Sanjay Jog. 28.28.3 As per EMA, the said reporter has made certain errors while publishing the news item which appeared in Business Standard. However, the DG has not even sought any reply from Shri Sanjay Jog when Shri VM Patil disputed the interpretation of his note published by Shri Sanja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of the provisions of Section 3 of the Act on the basis of the above evidence. 28.30 EMA meetings 28.30.1 The investigation report also finds that 2 meetings of EMA dated 09.01.2013 and 21.01.2013 were conducted after the Impugned Tender was issued on 02.01.2013 where all EMA members were called to Mumbai. Further, the investigation report finds that all bidding parties of Maharashtra had attended such meetings. As per the DG, convening two meetings after the announcement of tender provided a platform to the members to take a decision to submit higher prices in the tender . 28.30.2 It is noted by the Commission that agenda for such meetings or Minutes of Meeting of the same are not available on record. 28.30.3 Further, in the supplementary investigation report, the DG has found that the NDCs quoted by the Maharashtra bidders of not less than ₹40 per litre, in the Impugned Tender, are justified on the basis of their CoP. The same has not been stated to be a result of the above two meetings of EMA where the members allegedly took a decision to submit higher prices in the Impugned Tender. 28.30.4 As such, without either there being any evidence (in the form of Agend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cost effective manner, cannot be construed to be anti-competitive or in violation of the provisions of Section 3(3) of the Act. 30. With respect to OP-2, the DG has found that it is the apex body of about 260 co- operative sugar mills in India. All State Federations are also its members. NFCSF was also found to be actively working with ISMA. However, during the relevant period of investigation, no details of any meeting or involvement of its office-bearers with individual mills who participated in the tender was found by the DG. As such, allegations against NFCSF could not be substantiated. Since the investigation has not brought on record any evidence of anti-competitive conduct against OP-2, it cannot be held guilty of contravention of the provisions of Section 3(3) of the Act. 31. Lastly, the DG has also not found OP-15 to be a part of the alleged cartel between OP-1 (ISMA) and the sugar mills of the State of Uttar Pradesh. Again, since the investigation has not brought on record any evidence of anti-competitive conduct against OP-15, it cannot be held guilty of contravention of the provisions of Section 3(3) of the Act. Conclusion: 32. The investigation has not brought out su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
