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, 2015 CCI 17 decided on 10/07/2015

 

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