1. The present matter relates to the allegations of anti-competitive acts and conduct in the tender for procurement of Aluminium Phosphide Tablets (ALP) required for preservation of central pool food grains by Food Corporation of India. The Chairman and Managing Director (CMD) of Food Corporation of India (FCI) vide letter dated 04.02.2011 while drawing attention towards rise in cost of procurement due to anti-competitive agreement among the manufacturers of ALP in the tenders of FCI, had requested the Commission to make inquiries, in the matter as per the provisions of the Act.

2. The facts and allegations in the letter, in brief, are as under:-

2.1 It has been stated that there are four known manufacturers of the ALP in India, namely, M/s United Phosphorous Limited (UPL), M/s Sandhya Organic Chemicals Private Limited (SOCL), M/s Excel Crop Care Limited (ECCL) and M/s Agrosynth Chemicals Limited (ACL)(hereinafter collectively referred as "Opposite Parties") who are making supplies to FCI. On the basis of a statement showing the details of tenders floated by FCI for the procurement of ALP during the last 8 years, it was informed that the Opposite Parties had quoted identical rates in those tenders and on negotiations reduced the rates by the same margin.

2.2 The letter of CMD, FCI also alleged that since the Opposite parties quoted identical rates under an anti-competitive agreement or understanding, the very purpose of floating tenders was defeated. It has also been apprehended in the letter that the manufacturers of ALP have formed a cartel. Further, it has also been stated that it is possible that one of the manufacturers may be using its dominant position to compel the other manufacturers to quote the same rates in tenders which is quoted by the dominant manufacturer.

2.3 The letter also brings out that as a result of the anti-competitive conduct of the ALP manufacturers, the price of ALP Tablets has nearly doubled during the period 2007 to 2009 and in all probabilities, the price is likely to rise further in future as the suppliers are aware that the Tablets are required in large quantities by FCI, Central Warehousing Corporation (CWC) and State Agencies for preservation of food grains.

Prima Facie Opinion

3. Looking into the contents of the letter, the Commission took suo-motu cognizance and vide order dated 24.02.2011 directed the DG under section 26(1) of the Act to investigate the matter.

Findings of DG

4. The DG, after conducting investigation, submitted his report dated 14.10.2011 to the Commission. For the purposes of investigation, information was collected from FCI, Central Insecticides Board & Registration Committee, Faridabad (CIB), the Opposite Parties and other government agencies dealing in warehousing and storage of food grains. Besides, officials of FCI and representatives of the Opposite Parties were also examined in course of proceedings. The findings of the DG, in brief are, as under: -

4.1 As per DG, the main market of ALP in India, is that of Institutional sales and majority of buyers are government agencies like FCI, Central Warehousing Corporation, State Warehousing Corporations etc. There are private buyers licensed by Central Insecticide Board, Faridabad also. However, their number is not very significant.

4.2 DG has submitted that Aluminium Phosphide is sold in two to three packs; 56% 3 gram tablets, 15% 12 gram tablets and sachet of 10 gram powder. The sale of 3 gram tablets is restricted to the government agencies as well as approved Pest Control Operators (PCOs) and cannot be sold in the open market; whereas 12 gram tablets can be sold in the open market through licensed pesticide dealers.

4.3 For production of ALP, approval of CIB, Faridabad is required. In India there are only 4 manufacturers of ALP, namely, M/s United Phosphorous Limited (UPL), M/s Sandhya Organic Chemicals Private Limited (SOCL), M/s Excel Crop Care Limited (ECCL) and M/s Agrosynth Chemicals Limited (ACL), although as per the recor