Thirteen manufacturers/ suppliers of “CN bomb container” held guilty of cartelization (price fixing and collusive bidding)

Competition Commission of
India: The Competition
Commission of India (CCI) in its suo moto
cognizance found thirteen suppliers/manufacturers (opposite parties) of
containers with disc required for 81 mm bomb have engaged in the practices of
determination of purchase price of “CN Container” (the Product) and collusive
bidding in contravention of the provisions of sections 3(3)(a) and 3(3)(d) read
with section 3(1) of the Competition Act, 2002.

The CCI considering the remote possibilities of direct
evidence in the case of cartel reiterate its earlier decisions that the
existence of an anti-competitive practice or agreement can be inferred from the
circumstantial evidence i.e. conduct of the colluding parties.  Such conduct may include a number of
coincidences and indicia which, taken together and in absence of any plausible
explanation, points towards the existence of a collusive agreement.

The Commission noted that quotation of identical price
without any satisfactory justification on production cost gives apparent
evidence to price collusion adopted by the opposite parties. The Commission was
of the opinion that common ownership of a large number of opposite parties,
through related directors, coupled with the fact that a number of opposite parties
quoted same rates indicates to a conclusion that the opposite parties acted
pursuant to an anti-competitive agreement/understanding to manipulate the
bidding process in the present case. Price parallelism coupled with peculiar
market conditions like few enterprises with same owners, stringently
standardized product, predictable demand, etc., unequivocally establishes that
the conduct of the Opposite Parties of quoting identical/ similar price bids
was only due to collusive tactics adopted by them in violation of section 3(1)
read with sections 3(3)(a) and section 3(3)(d) of the Act.

The Commission noted that, in the absence of any such an
anti-competitive agreement, the bidders would have not only competed against
each other (on price) but may have also undercut each other to secure the
contract which would have resulted in lower prices for the consumers.
Therefore, the consumers, i.e., the three ordinance factories, have also been
deprived of the benefits that could have accrued to them on account of the competitive
bidding process. The Commission in its order directed the opposite parties to
cease and desist from the anti-competitive practices and imposed a penalty at
the rate of 3% of the average turnover of the relevant financial years, [In Re: M/s Sheth & Co & others,  Suo moto Case
No. 04/2013, decided on 10/06/2015] 
Source: Legal news India

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