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: Sheth & Co.,2015 CCI 12, decided on 10/06/2015

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