Independent decisions do not give benefit of ‘single economic entity’ defence: Four insurance PSUs found guilty of bid rigging

Competition Commission of India: The
CCI found insurance PSUs guilty of cartelization qua rigging the tender floated
by the Government of Kerala for selecting insurance service provider for
implementation of the ‘Rashtriya Swasthya Bima Yojna’(‘RSBY’). The regulator
imposed around 670 crore rupees penalty on the PSUs.

The notable
point in this order is that CCI did not buy the ‘single economic entity’
argument advanced by the PSUs. They argued that since the Government of India
holds 100% shares of all the four companies, and controls the management and
affairs of the companies through Ministry of Finance, therefore these PSUs constitute
‘single economic entity’. However, the CCI rejected the argument on the ground
that the Finance Ministry was not informed and consulted by these companies
before or after submitting their bids thus they participated in the tender
independent of the Finance Ministry. [In Re:
Cartelization by public sector insurance companies in rigging the bids, decided on 10/07/2015]

Source: Legal news India

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