IMPORTANT POINTS
Competition Commission of India is entrusted with the task (as a regulator) of ensuring that no such anti-competitive practices like cartelisation are undertaken.
Section 3(3) raises presumption of cartelisation which is rebuttable.
Sections 3 and 19 are to be read in conjunction.
‘Bid rigging’ and ‘collusive bidding’ are overlapping concepts.

Headnote:(a) Competition Act, 2002 – Section 3 – Anti-competitive practices –Act prohibiting anti competitive agreements – Competition among the enterprises or businessmen treated as service for a public purpose – Therefore, the Competition Commission of India is entrusted with the task (as a regulator) of ensuring that no such anti-competitive practices like cartelisation are undertaken. (Para 69, 71)
       (2017) 8 SCC 47; Competition Commission of India vs. Steel Authority of India Limited – Relied upon
       (b) Competition Act, 2002 – Section 3 – Cartelisation – Agreement between business entities having appreciable adverse effect on competition within India – Treated as void – Types as in section 3(3)(a) to (d) – Cases not falling under these provisions to be enquired keeping in view the factors mentioned in section 19(3) for determining their adverse effect on competition – Section 3(3) raising presumption of cartelisation – Rebuttable – Sections 3 and 19 are to be read in conjunction. (Para 72, 73)
       (c) Competition Act, 2002 – Section 3(3)(d), Explanation – Bid rigging – Necessary ingredients – Agreement between the parties, engaged in identical or similar production or trading of goods or provisions of services; and the agreement having effect of eliminating or reducing competition of bids or adversely affecting or manipulating the process for bidding – Collusive rigging – ‘Bid rigging’ and ‘collusive bidding’: overlapping concepts – Function of the CCI being to ensure competition and instantly there being possibility of bid rigging, held, CCI had jurisdiction. (Para 75, 76, 77, 78)
       (2017) 8 SCC 47; Steel Authority of India Limited – Relied upon
       (d) Competition Act, 2002 – Section 3 – Anti-competitive practices – Collusive bidding – Standard of proof – Of probability – No proof of concluded formal agreement – Indications of practical cooperation between the parties, knowingly substituting the risk of competition, would amount to anti-competitive practices – Instantly, identical bidding taking place after the meeting – Various suppliers giving identical bids despite varying cost – Lastly bidders appointed common agents etc. – Possibility of such an agreement inferred by CCI. (Para 80, 81, 82, 83)
       (2005) 5 SCC 465; (1963) 48 ITR 9 – Relied upon
       (e) Competition Act, 2002 – Section 3 – Market conditions, price regulation by IOCL and the Government under the LPG Order, 2000, limited number of buyers – Necessarily force the suppliers to quote very close prices – Some aspects of the meeting nit considered by CCI – Only 19 out of 50 suppliers attending the meeting – Even then all suppliers quoting the same rate – Held, meeting was not the reason for such bidding – IOCL despite having full control over the tendering process not summoned – Held, no sufficient evidence to establish any agreement between the appellants for bid rigging. (Para 90, 91, 92, 101, 102, 103)
       (2017) 8 SCC 47 – Relied upon
       (1993) 3 SCC 499; (2007) 2 SCC 640; (1993) 1 SCC 467; (1990) 3 SCC 682; (1985) 1 SCC 591; 31.3.1993, ECJ – Referred
       Facts of the case:
       The Competition Commission of India, in suo-motu proceedings, held that the appellants/suppliers of Liquefied Petroleum Gas (LPG) Cylinders to the Indian Oil Corporation Ltd. had indulged in cartilisation, thereby influencing and rigging the prices, thus, violating the provisions of Section 3(3)(d) of the Competition Act, 2002.
       This decision has been upheld by the Competition Appellate Tribunal.

       Finding of the Court;
       There is no sufficient evidence of bid rigging.
       Result: Appeals allowed.

JUDGMENT :

A.K. Sikri, J.

All these appeals are filed against the orders dated 20th December, 2013 passed by the Competition Appellate Tribunal (hereinafter referred to as ‘COMPAT’). The COMPAT by the said judgment has upheld the findings of the Competition Commission of India (for short, ‘CCI’) that the appellants/suppliers of Liquefied Petroleum Gas (LPG) Cylinders to the Indian Oil Corporation Ltd. (for short, ‘IOCL’) had indulged in cartilisation, thereby influencing and rigging the prices, thus, violating the provisions of Section 3(3)(d) of the Competition Act, 2002 (for short, the ‘Act’). The CCI, as a result, imposed severe penalties in the form of fines under Section 27 of the Act. While maintaining the order of the CCI insofar as it found the appellants guilty of contravention of Section 3(3)(d) and also under Section 3(3)(a) of the Act, the COMPAT has reduced the amount of penalty. These suppliers have filed the instant appeals on the ground that there was no cartilisation and they have not contravened the provisions of the Act. On the other hand, CCI has also come up in appeal challenging latter part of the order whereby penalties inflicted on the suppliers stand reduced. For the sake of convenience these suppliers will be referred to as the appellants hereinafter.

2. We may point out at the outset that all these appellants are manufacturing gas cylinders of a particular specification having capacity of 14.2 kg which are needed for use by the three oil companies in India, namely, IOCL, Bharat Petroleum Corporation Ltd. (BPCL) and Hindustan Petroleum Corporation Ltd. (HPCL) [all public sector companies]. It is also a matter of record that apart from the aforesaid three companies there are no other buyers for these cylinders manufactured by the appellants. Insofar as IOCL is concerned, it is a leading market player in LPG as its market share is 48%. Thus, in case a particular manufacturer is not able to supply its cylinders to the aforesaid three companies, there is no other market for these cylinders and it may force that company to exit from its operations. We may also point out at this stage itself that inquiry was started against 47 companies. The CCI exonerated two companies and found that 45 companies had entered into an arrangement/agreement insofar as statements of bids pursuant to tenders issued by IOCL are concerned. Out of these 45 companies one did not challenge the orders before the COMPAT and other 44 had filed appeals which have been decided by the COMPAT.

3. The manner in which the inquiry was undertaken by the CCI, culminating into the finding of guilt and imposition of penalty, is succintly and sequally recorded by the COMPAT in its impugned order. As there is no dispute about the said factual narration, it would be convenient to borrow the said discussion as recorded by the COMPAT.

4. The suo-motu proceedings were started by the CCI on the basis of the information received by it in Case No. 10 of 2010 titled M/s. Pankaj Gas Cylinders Ltd. Vs. Indian Oil Corporation Ltd. in that case a complaint was made by M/s. Pankaj Gas Cylinders before the CCI complaining about unfair conditions in the tender floated by IOCL for the supply of 105 lakh 14.2 Kg. capacity LPG Cylinders with SC valves in the year 2010-11, the tender No. being LPG-O/M/PT-03/09-10. While considering the Director General’s investigation report in Case No. 10 of 2010, the CCI in pursuance of its duties under Section 18 felt that investigation was necessary in the case of all bidders who were the suppliers of 14.2 kg. LPG cylinders in that tender. In the investigation report in the said case, the Director General had noted that out of 63 bidders who participated in the tender, 50 bidders were qualified for opening of price bids, while 12 bidders were qualified as new vendors who were not required to submit price bids and one bidder was not qualified for the opening of the price bid. The technical bid of the subject tender was opened on 3.3.20

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