CCI | No abuse of dominant position contemplated under S. 4 of Competition Act found against Gujarat SBST

Competition Commission of India (CCI), New Delhi: Coram comprising of Ashok Kumar Gupta (Chairman) and U.C. Nahta and Sangeeta Verma (Members), dismissed an application as the allegations in regard to abuse of dominant position or any other were not found to have been established.

The present case was filed by the Informant under Section 19(1)(a) of Competition Act, 2002, alleging contravention of provisions of Section 4 of the Competition Act, 2002 by Gujarat State Board of School Textbook (Opposite Party).

Opposite party used to publish school textbooks in various languages for the students of standard 1st to 12th. Syllabus for these textbooks was prescribed by the Gujarat Council of Educational Research and Training (GCERT) that was accepted by the Gujarat Government. It has also been submitted that OP has been entrusted with the responsibility of publishing various study materials in the State of Gujarat.

Allegations placed against OP

Opposite Party, without any stipulation in the terms of the contract, started discriminating between the printers by allotting more work to printers using web offset printing. Various printers decided to upgrade their machinery which resulted in the dependence for work on the OP as the customised up-gradation was done for OP’s work.

Opposite Party introduced a new system vide its Tender, as per which provided rates for the different types of category for printing & binding jobs.  After the opening of the commercial bids, it was discovered that 21 bidders had quoted identical bids of minus 31% of the base rate.

The Informant alleged that the said price was collusively decided by the said 21 bidders, forming a cartel. Thus, the said information formed to be the subject-matter of the investigation.

Informant alleged that OP is a dominant enterprise for the printing of textbooks in the State of Gujarat and is thus solely responsible for publishing of study material. Further, it added that the responsibility of getting the printing work done, confers a monopsonistic power on OP in respect of procurement of printing and binding services from the printers and the OP has abused its dominant position by imposing unfair and discriminatory price and conditions in purchase of such services.

Informant along with the allegation of abuse of dominant position also filed a separate application under Section 33 of the Act praying – an interim relief in nature of an interim order to OP to immediately stop the discriminatory price of excluding the Informant.

Analysis & Conclusion

Commission considered the above-stated matter and directed the OP to explain the procedure followed for empanelment of qualified bidders as per its tender and the reasons to exclude the 32 bidders.

Submissions of the OP are briefly stated under and which were noted by the Commission:

  • OP’s main objective is to make basic education affordable. Since the printing cost will directly affect the cost of textbooks which are made available to the students, the Tender cannot be termed as anti-competitive considering that the requirement of printing textbooks is for making basic education affordable.
  • Informant is venting his personal grievance in guise of the present information to coerce the OP to empanel him for the work of textbook printing.
  • Price for the printing of web-offset is actually a more cost-effective way of printing as there is major reduction in labour cost due to advanced technology
  • OP never specified any contractual condition with regard to upgrading of machinery which was, in fact, voluntary conduct on the part of printers to procure majority work against their competitors. Moreover, there is an alternative market for provisions of services of printing as the number of government schools have reduced to 76 % in the State of Gujarat.
  • total production capacities as declared by respective L1 bidders (26 bidders – deriving common L1 bidders for sheet-fed and web offset) were not found to be sufficient by the Opposite Party to complete the estimated requirement in the given timeline
  • Empanelled printers were required to submit a certain bank guarantee as per the stipulated terms. However, most printers were not able to furnish the required bank guarantee.

Commission dealt with the application very carefully and noted the submissions by the parties, further it found no merit in the application filed and no abuse of dominant position under Section 4 was established. [Ashokbhai M. Mehta v. Gujarat State Board of School Textbook, 2019 SCC OnLine CCI 30, decided on 07-08-2019]

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