COMPAT upholds order of CCI closing bid-rigging case against railway suppliers of Axle Mounted Disk Braking System (ADBMS)- |

Competition Appellate Tribunal (COMPAT) by its order dated February 17, 2016 has upheld the order of CCI closing the case for bid-rigging for supply of Axle Mounted Disk Braking System (ADBMS) to Indian Railways.

In the instant case, the investigation related to quoting of identical prices in three emergency purchase tenders by the opposite parties, M/s Faiveley Transport (India) Pvt. Ltd. and M/s Knorr Bremse India Pvt. Ltd. for procurement of ADBMS by Rail Coach Factory, Kapurthala, Punjab(RCF) ( collectively referred as “respondent”) . The Appellant , the Deputy Chief materials Manager of Rail Coach Factory, Kapurthala, who had filed the reference in CCI , alleged that the respondents took advantage of the limited competition in the market for supply of AMDBS and refused to provide cost break-up and proper justification for the rates quoted by them, which showed that their conduct was anti-competitive. The reference was sent to the Director General (DG) for investigation by CCI.

The Director General (DG) during the investigation, found evidence of bid rigging since the rates quoted by the two suppliers (who were the only suppliers approved by the Research and Design Organization (RDSO) of the Indian Railways) were identical in each of the three tenders under inquiry. However, CCI closed the reference of the Railways on grounds that mere identical rates by the respondents did not prove cartelization.

The Hon’ble COMPAT, agreeing with the views of CCI, while dismissing the Appeal observed that “in an oligopolistic market like the one in question, the identity of price quoted by the bidders is not an unusual feature. The players in a limited market are aware of the price quoted by each other in one or the other bid and it is a normal tendency to quote the same price in response to the next tender. Therefore, identical price quoted by the respondents for the items of AMDBS did not constitute sufficient evidence of cartel formation and in the absence of other plus-factors, it is not possible to record a finding that the respondents had acted in violation of Section 3(3)(d) read with Section 3(1) of the Act” . The Hon’ble COMPAT placed reliance upon a Supreme Court judgment in re: Union of India Vs. Hindustan Development Corporation and Others. [1993 (3) SCC 499] .Source: Order dated February17, 2016. For full text see COMPAT website-www.compat.nic.in)

COMMENT: This order passed by COMPAT is a unique order since by this order the Hon’ble Tribunal has admitted an appeal filed by an Informant against an Order of CCI when no such appeal is prescribed by the Act. The Hon’ble Tribunal apparently did not consider it necessary to go into the legal issue of challenge to its jurisdiction itself, since it was not in the interest of the Informant /Appellant to raise this issue and the order has been passed without issuing notice to the respondents or to CCI. Whether this order sets up a precedent against the celebrated judgment of the Hon’ble Supreme Court deciding this very issue in the case of CCI vs. SAIL (2010) 10 SCC 744 ,remains to be seen.

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About the author

M M SHARMA

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.  Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal. Included as a ‘Recognised Practitioner’ in Individual Lawyers’ranking by Chamber’s Asia Pacific Guide 2020 for Antitrust/Competition Law.