The Competition Commission of India (CCI) on Tuesday imposed a penalty of ₹38 crore on 18 sugar mills and two associations for rigging the bids in respect of a joint tender floated by oil marketing companies for procurement of ethanol for blending with petrol.
“A total penalty of ₹38.05 crore was imposed upon 18 sugar mills and their trade associations (ISMA/ EMAI). Besides, a cease and desist order was also issued against them,” the CCI said in a statement.
The government owned public sector oil marketing companies—IOCL, HPCL, BPCL, had invited quotations from alcohol manufacturers for supply of ethanol through a joint tender dated 02.01.2013 which was issued by BPCL on behalf of OMCs.
The Commission noted that the bidders through their “impugned conduct” have contravened the provisions of Section 3 of the Competition 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 bidders who participated in respect of the depots located in U.P., Gujarat and Andhra Pradesh in response to the joint tender floated by OMCs, were found to have acted in a concerted and collusive manner in submitting their bids,” it added, stating that this was evidenced from the prices quoted, quantities offered and the explanations given by the parties.
“Such collusion was further strengthened from the fact that the bidders utilized the platform of ISMA and also acted on the signals emitted by EMAI which influenced the bidding behavior of the parties,” the CCI said.
While imposing penalties, the Commission applied the principle of relevant turnover and based the penalties on the revenue generated by the sugar mills from sale of ethanol only. “The penalty was imposed by the Commission at 7% of the average relevant turnover of the sugar mills. However, penalty at 10% of the average receipts was imposed upon the Trade Associations viz. ISMA and EMAI keeping in view the key role they played in facilitating bid rigging,” it said.
