Competition Commission of India reiterates that merely having common business linkages can't be the basis to suggest collusion in the bidding process

Competition Commission of India reiterates that merely having common business linkages can't be the basis to suggest collusion in the bidding process

In the matter of XYZ Vs. Lake forest Wines Private Limited and others, the Competition Commission has opined that the facts and evidence available on record in the instant case were not sufficient to establish even a prima facie case of contravention of the provisions of Sections 3 of the Competition Act, 2002(Act) against the Opposite Parties. The matter was, thus, ordered to be closed forthwith in terms of the provisions of Section 26(2) of the Act.

Herein, the information had been filed by XYZ (Informant) under Section 19(1)(a) of the Competition Act, 2002 against Lake forest Wines Private Limited (OP-1), Ashir Marketing (India) Private Limited (OP-2), Sarja Associates Private Limited (OP-3) (collectively referred to as the OPs), alleging contravention of the provisions of Section 3 of the Act.

It was alleged that the OPs had cartelised to limit and control the supply of Imported Foreign Liquor (Bottled in Original 'BIO') [hereinafter IFL (BIO)] in the state of Haryana and rigged the tenders for the License for supply of IFL (BIO) in the state of Haryana i.e. L-1BF license, floated by the Excise and Taxation Department, Government of Haryana.

It was also alleged that transactions further the fact that OP-1 and OP-3 were engaged in anti-competitive practices to control and restricted the wholesale vend of IFL (BIO) in the state of Haryana and there was an express arrangement / understanding between them to that effect.

It was brought to the notice of the Commission that it was in the name of Mr. Dharmendra that Mr. Sachdeva procured and supplied stocks from the OPs to the L-2 licensees in the state of Haryana. Mr. Dharmendra being an L-1 licensee procured the supply from the L-1BF licensees in the state of Haryana, i.e. OP-1 and OP-3. This procurement was done by Mr. Dharmendra without making any payment to the licensees, i.e. OP-1 and OP-3. Further, as per the provisions of the Excise Policy 2019-20, Mr. Dharmendra further sold the liquor so procured to the retail L-2 licensees.

As per the informant, the interplay between the OPs, Mr. Dharmendra and Mr. Sachdeva, showed that Mr. Sachdeva was related to all the OPs and was spearheading the entire operation to cartelize the wholesale vend of IFL (BIO)/ IFL in the state of Haryana in contravention of the provisions of Section 3(3)(b) and Section 3(3)(d) of the Act.

The Commission observed that no details or documents relating to the tenders floated by the Haryana Excise and Taxation department for L-1BF licenses which were alleged to have been rigged by way of bid rotation had been furnished by the Informant. Also, there was no other evidence that indicated meeting of minds or collusive behaviour by the OPs.

The Commission affirmed that the evidence which had been furnished only showed that the OPs may be related parties, who participated in the bidding / allotment process for the L-1BF license in a manner which was in violation of the Haryana Excise Policy, 2019-20, particularly Clause 9.5.1.2 of the said Policy. However, it was pertinent to mention here that mere contravention of the Policy did not imply contravention of the provisions of Section 3 (3) (d) of the Act, unless there was material to substantiate the allegations of bid rigging by way of collusion amongst OPs.

The Commission pointed out that there have been certain past decisions of the Commission where such facts have been found insufficient to prima facie establish contravention of the provisions of Section 3 of the Act.

The Commission in, In Re: Ved Prakash Tripathi v Director General Armed Forces Medical Services &Ors. (Case No. 10 of 2020), had held that mere commonality of directors or ownership of participating firms, in itself, is not sufficient to record any prima facie conclusion about bid rigging in the absence of any material indicating collusion amongst such bidders while participating in the impugned tender.

The judgment of Re: Reprographics India v. Hitachi Systems Micro Clinic Pvt. Ltd. &Ors, was also referred to wherein it was held that merely having common business linkages between the OPs as projected by the Informant, cannot be the basis to suggest collusion in the bidding process.