Competition Appellate Tribunal (COMPAT) sets-aside penalty on Jungle Boot suppliers for alleged bid rigging for supplies to Paramilitary Forces, State Police, Railways, etc. |

Jungle Boots

COMPAT by its order dated April 12, 2016 has set-aside the penalty imposed on suppliers of Polyester Blended Duck Ankle Boot Rubber Sole (Jungle Boots) against allegations of bid-rigging.

The suppliers have been engaged in the supply of jungle boots to the Armed Forces under the rate contracts awarded by the Director General (Supplies and Disposals) (DG S & D) from time to time .

A reference was filed in the Competition Commission of India (CCI) by the DG(S&D) alleging that the suppliers had indulged in bid-rigging in response to a particular tender dated 14.06.2011 issued by DG (S&D). CCI held that a prima-facie case was made out for investigation under Section 26(1) of the Competition Act, 2002. (the Act) and directed the Director General (DG)/ CCI to investigate the allegations.

The DG found that the suppliers had been quoting identical/near identical prices against the tenders as evident from the direct and indirect evidence. The DG Report found that the suppliers had indulged in bid-rigging in contravention of Section 3(1) read with Section 3(3)(a), 3(3)(b) and 3(3)(d) of the Act.

The CCI considered that the quotation of near identical prices despite the manufacturing units having been located in different geographical locations with varying tax structure and different margins; possession by one bidder of the performance statements of other bidders; meetings under the platform of trade federation; and failure on the part of the opposite parties to provide any plausible explanation for the same,collectively constitute “plus factors” to corroborate the finding of parallel pricing which are clearly indicative of the fact that the appellants entered into an “agreement” to determine prices besides rigging the bid. The CCI thus approved the findings of the DG and imposed a penalty at the rate of 5% of the average turnover for the preceding three financial years.

The COMPAT, considered the defense submitted by the appellants and relying on its own judgments as well as those of the Supreme Court, held that mere quotation of identical pricing by the appellants in response to tender inquiry dated 14.06.2011 did not amount to bid rigging . COMPAT found that the so called “plus factors” relied upon by CCI for recording a finding of bid-rigging did not stand to reason on a careful scrutiny and were not legally sustainable to corroborate the finding of existence of an agreement among the appellants to prove bid rigging and held that the order of CCI deserves to be set-aside. The order of CCI has accordingly been set-aside by COMPAT.

Lastly, the COMPAT also considered that the suppliers were multi-product companies and the CCI committed grave illegality by imposing the penalty on the basis of entire turnover of the companies. (Source: Order dated April 12, 2016. For full text see COMPAT website-www.compat.nic.in)

Note: Mr MM Sharma of Vaish Associates, Advocates represented three appellants out of the 10 appellants in the appeals before COMPAT.

(ii) Bid-Rigging in Public Procurement: Some evolving trends in Indian Competition Law

(iii) Competition Appellate Tribunal (COMPAT) directs Competition Commission of India (CCI) to re-consider penalties imposed on LPG manufacturers

(iv) COMPAT sets aside order against Cement Cartel

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.