The Competition Commission (CCI) has directed 10 enterprises and some of their officials to cease and desist from indulging in anti-competitive practices but refrained from imposing monetary penalties in a matter related to cartelisation in bidding for certain tenders of the Indian Railways.
The current economic situation due to the coronavirus pandemic and the fact that some of the enterprises were MSMEs, were taken into consideration before the watchdog decided against imposing monetary penalties.
The cease and desist order has been passed against ten entities and some of their officials. The entities include Hindustan Composites Ltd., Industrial Laminates (India) Pvt. Ltd., BIC Auto Pvt. Ltd. (now Masu Brake Pads Pvt. Ltd.), Escorts Ltd. (Railway Equipment Division), Rane Brake Lining Ltd. and Om Besco Super Friction Pvt. Ltd.
Others are Cemcon Engineering Co. Pvt. Ltd., Sundaram Brake Lining Ltd., Bony Polymer Pvt. Ltd. and Daulat Ram Brakes Mfg. Co.
There were various complaints alleging that the firms quoted identical bids in the tenders floated for procurement of Composite Brake Block (CBB) and that identical reductions in quoted rates were offered by them in subsequent negotiations.
Following the complaints, the CCI had directed its investigation arm — Director General (DG) — to probe the matter. The DG found that the enterprises indulged in cartelisation during the 2009-17 period.
‘Officials indulged in cartelisation too’
According to the CCI, apart from the firms, their respective officials also indulged in cartelisation in the CBB market in India, at least from 2009 till 2017. This was by means of directly or indirectly determining prices, allocating markets, coordinating bid response and manipulating the bidding process, which had an adverse effect on competition within India, it added.
In a detailed order dated July 10, the regulator directed the firms and their officials “to cease and desist in future from indulging in practices which have been found in the present order to be in contravention of the provisions of Section 3 of the Act“.
Section 3 of the Competition Act pertains to anti-competitive agreements.
However, the watchdog said the parties concerned have not only cooperated but have even admitted their respective role in the tenders.
The CCI noted that some of the entities are Micro Small and Medium Enterprises (MSMEs) and have small annual turnover in the CBB segment.
“At the same time, the Commission is also cognizant of the prevailing economic situation arising due to the outbreak of global pandemic (COVID-19) and the various measures undertaken by the Government of India to support the liquidity and credit needs of viable MSMEs to help them withstand the impact of the current shock.
“In this backdrop, considering the matter holistically and cumulatively, the Commission, in the interest of justice, refrains from imposing any monetary penalty in the peculiar circumstances of the case...,” the order said.
On cooperation of the firms during the investigation, the CCI said that such cooperative conduct optimises the resources of the DG as also expedites the adjudicatory process besides lessening the regulatory burden.
“The ultimate object of the Act is to correct the market distortions and to discipline the behaviour of the market participants,” the regulator said.
At the same time, the watchdog cautioned that the parties’ future conduct should be in accord with the provisions of the Competition Act, failing which any such future behaviour would be viewed seriously.
