7 firms penalised for bid-rigging, cartelisation in Indian Railways tenders

The Competition Commission of India (CCI) has issued a final order against seven companies for alleged involvement in cartelisation and influencing the prices of a tender launched by Indian Railways.

The firms were found to have contravened the provisions of Sections 3(3)(a), 3(3)(b), 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002 (Act), which proscribe anti-competitive agreements.

The case was initiated based on a lesser penalty application filed by one of the cartelising entities. 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.

MANIPULATING BIDDING PROCESS

The CCI found these seven firms to have indulged in cartelisation in the supply of Protective Tubes to the Indian Railways through directly or indirectly determining prices, allocating tenders, controlling supply and market, co-ordinating bid prices and manipulating the bidding process.

The evidence in the matter included regular e-mail communications between the parties and the filing of bids from the same IP addresses by certain parties.

Further, 10 individuals of these seven entities were also held by the CCI to be liable for the anti-competitive conduct of their respective companies/ firms, in terms of the provisions of Section 48 of the Act.

The CCI imposed penalties of 5% of the average turnover/ income on companies/ firms and certain individuals found guilty of violating the provisions of the Act.

However, the benefit of reduction in penalty under the provisions of Section 46 of the Act of 100% was given to the lesser penalty applicant. Post reduction, the CCI directed the parties to pay penalties totalling Rs 30 lakh (approx), besides issuing a cease-and-desist order.