CCI issues cease and desist order against firms found guilty of bid rigging and cartelization in tender floated by Eastern Railway

The Competition Commission of India (CCI) issued a final order today against eight firms that were found to have contravened the provisions of Sections 3(3)(a) and 3(3)(d) of the Competition Act, 2002 (‘the Act’) read with Section 3(1), which proscribe anti-competitive agreements. The case was initiated on the basis of a reference filed on behalf of the Eastern Railway.

CCI found these firms to have indulged in cartelization in the supply of Axle Bearings to Eastern Railway by means of directly or indirectly determining prices, allocating tenders, coordinating bid prices and manipulating the bidding process. The evidence in the matter included e-mails, call detail records and the statements of the representatives of the firms.

The e-mails exchanged showed that the firms discussed quantity allocation with respect to the tenders of Indian Railways for the procurement of Axle Bearings amongst themselves. The vendors were also found to have discussed the compensation mechanism in the event that some of them did not win the agreed quantities. Of the eight (8) entities, two (02) were lesser penalty applicants before the CCI. Under Section 46 of the Act, a cartel member may approach the Commission by way of filing an application seeking a lesser penalty, in return for providing full, true and vital disclosures in respect of the alleged cartel to the Commission.

Against this backdrop, CCI found eight firms guilty of bid rigging and cartelization in tender floated by Eastern Railway during the years 2015 to 2019. However, CCI refrained from imposing any monetary penalty considering the firms were MSMEs with limited staff and turnover, the cooperative and non-adversarial approach adopted by firms in acknowledging their involvement as well as the economic stress wrought upon the MSME sector in the wake of COVID-19.

Furthermore, the Commission found that the OPs stopped their cartel conduct immediately after the investigation began in the earlier matter (i.e., Ref. Case No. 02 of 2018). Thus, the Commission considered the aforesaid fact as the mitigating factor for not imposing any monetary penalty and issued a cease and desist order against the firms.

The order was passed in Ref. C. No. 02 of 2020 and a copy of the order is available at the CCI website at www.cci.gov.in.

Disclaimer : This is an official press release by PIB.