The Competition Commission of India (CCI) has found as many as eighteen sugar mills across the states of Uttar Pradesh, Gujarat, and Andhra Pradesh guilty of bid-rigging..The CCI also found Indian Sugar Mills Association (ISMA) and Ethanol Manufacturers Association of India (EMAI) guilty of contravening Section 3(3) read with Section 3(1) of the Competition Act, 2002..The matter dates back to 2013, when complaints were filed challenging a joint tender floated by Public Sector Oil Marketing Companies for the procurement of ethanol. It was alleged in the information filed that the suppliers of ethanol (mainly sugar mills) had contravened Section 3 of the Act by rigging bids submitted pursuant to the said tender, by quoting an exorbitant price for the supply of ethanol to Oil Marketing Companies (OMCs)..On receiving the information, the Commission in May 2013 passed an order noting that there prima facie existed a collective decision to fix the price of ethanol for supply to OMCs by sugar mills. Therefore, it ordered the Director General (DG) to investigate the matter..Pursuant to the order, nineteen sugar mills, ISMA, EMAI, National Federation of Cooperative Sugar Factories Limited (NFCSF) and OMCs like Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and Indian Oil Corporation Limited (IOCL) were investigated by the DG..It was later found by the DG that the allegations against he OMCs in question, as well as those against NFCSF, and one of the sugar mills, could not be substantiated. The rest of the opposite parties, were, as per the DG’s findings, guilty of bid-rigging..The main issues before the CCI bench, headed by Chairperson Sudhir Mital were:.Whether the joint tender floated by OMCs is in violation of provisions of Section 3(1) read with Section 3(3) of the Act?Whether the tender floated on 02.01.2013 by PSU OMCs was rigged by sugar mills/ISMA/EMAI/ NFSCF in contravention of the provisions of Section 3 of the Act?.The CCI answered the first question in the negative, holding,.“By floating a joint tender and thereafter, distributing the procured ethanol amongst themselves, the OMCs are also giving themselves an opportunity of equitable blending of ethanol such that, no particular OMC is able to provide the ethanol-blended petrol, to the exclusion of others.”.However, as far as the second question was concerned, the CCI found that the eighteen sugar mills as well as ISMA and EMAI were guilty of bid-rigging, and thus contravened Section 3 of the Act..The chief rationale behind the finding was that the bidders could not offer a satisfactory explanation as to how they arrived at the same basic price and the Net Delivered Cost. Further, the fact that no plausible explanation could be offered by the bidders as to how the freight charges could match exactly despite substantial variance in distance between the distilleries of the bidders, led the CCI to come to the above-mentioned conclusion..In response to arguments that the findings were based on circumstantial evidence, the CCI held,.“…in respect of cases concerning cartels which are hidden or secret, there is little or no documentary evidence and the available evidence may be quite fragmentary. The evidence may also be wholly circumstantial. It is therefore often necessary to reconstitute certain details by deduction….…In the present case, the material on record clearly establishes that the bidders have acted in a collusive and concerted manner while quoting prices and quantities. In the absence of any logical or plausible explanation offered by the parties, the impugned conduct of the bidders when viewed collectively, shows that there was no other plausible explanation other than that the OPs have engaged in bid-rigging.”.Therefore, the Commission imposed a penalty at the rate of 7% of the average relevant turnover for the preceding three financial years arising out of the sale of ethanol pertaining to the opposite parties found to be guilty of bid-rigging..The following lawyers/law firms represented the parties before the CCI:.PartySenior AdvocateLawyers/Law FirmsIndia GlycolsManas K Chaudhuri, Sagardeep Rathi, Pranjal Prateek (Khaitan & Co)Jubilant Life Sciences LimitedKapil DuaISMAVikas SinghAmitabh Kumar, Samir Agrawal, Vibha Dhawan (J Sagar Associates)NFCSFAmitabh Kumar, Samir Agrawal, Vibha Dhawan, (J Sagar Associates)EMAIBhushan V MahadikBPCL, HPLC, IOCLML LahotiReeta Mishra, Mandakini Bajaj (Kochhar & Co), Nikhil Anand, Anchit SripatSahakari Khand Udyog Mandal Ltd, Shree Ganesh Khand Udyog Sahakari Mandli Ltd, Shri Kamrej Vibhag Sahakari Khand Udyog Mandli Ltd, Shree Mahuva Pradesh Sahakari Khand Udhyog Mandli LtdBhushan V MahadikThe Andhra Sugars LtdMA Chinnasamy, V Senthil KumarSarvaraya Sugars LtdSudipto Sircar, M Balanaga SrinivasBajaj Hindusthan LtdPawan Sharma, Nripi Jolly, Anuj Shah (AZB & Partners)Avadh Sugar & Energy LtdSudhanshu BatraPankaj BhagatTriveni Engineering Industries LtdRishi Agrawala (Agarwal Law Associates)Simbhaoli Sugars LimitedSushil ShuklaDhampur Sugar Mills LimitedAbdullah Hussain, Divye Sharma, Samarth Shergil (L&L Partners Law Officers)Balrampur Chini Mills LtdAS ChandhiokAbdullah Hussain (L&L Partners), Amitabh Kumar (JSA), Ritesh Kumar, Dipender Chauhan, Sameer AgrawalMawana Sugars LtdPK BhallaK M Sugar Mills LtdPankaj Bhagat, Sadre AlamUttam Sugar Mills LtdPankaj Bhagat, Shipra BhuttanDalmia Bharat Sugar & Industries LtdKaran Singh Chandhiok, Mahima Singh, Avdhesh Bairwa, Kalyani Singh (Chandhiok & Mahajan)Seksaria Biswan Sugar Factory LtdRavisekhar Nair, Sahil Khanna, Abhay Joshi (Economic Laws Practice)Sri Shadi Lal Enterprises LtdMM Sharma, Deepika Rajpal.Read the order:
The Competition Commission of India (CCI) has found as many as eighteen sugar mills across the states of Uttar Pradesh, Gujarat, and Andhra Pradesh guilty of bid-rigging..The CCI also found Indian Sugar Mills Association (ISMA) and Ethanol Manufacturers Association of India (EMAI) guilty of contravening Section 3(3) read with Section 3(1) of the Competition Act, 2002..The matter dates back to 2013, when complaints were filed challenging a joint tender floated by Public Sector Oil Marketing Companies for the procurement of ethanol. It was alleged in the information filed that the suppliers of ethanol (mainly sugar mills) had contravened Section 3 of the Act by rigging bids submitted pursuant to the said tender, by quoting an exorbitant price for the supply of ethanol to Oil Marketing Companies (OMCs)..On receiving the information, the Commission in May 2013 passed an order noting that there prima facie existed a collective decision to fix the price of ethanol for supply to OMCs by sugar mills. Therefore, it ordered the Director General (DG) to investigate the matter..Pursuant to the order, nineteen sugar mills, ISMA, EMAI, National Federation of Cooperative Sugar Factories Limited (NFCSF) and OMCs like Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and Indian Oil Corporation Limited (IOCL) were investigated by the DG..It was later found by the DG that the allegations against he OMCs in question, as well as those against NFCSF, and one of the sugar mills, could not be substantiated. The rest of the opposite parties, were, as per the DG’s findings, guilty of bid-rigging..The main issues before the CCI bench, headed by Chairperson Sudhir Mital were:.Whether the joint tender floated by OMCs is in violation of provisions of Section 3(1) read with Section 3(3) of the Act?Whether the tender floated on 02.01.2013 by PSU OMCs was rigged by sugar mills/ISMA/EMAI/ NFSCF in contravention of the provisions of Section 3 of the Act?.The CCI answered the first question in the negative, holding,.“By floating a joint tender and thereafter, distributing the procured ethanol amongst themselves, the OMCs are also giving themselves an opportunity of equitable blending of ethanol such that, no particular OMC is able to provide the ethanol-blended petrol, to the exclusion of others.”.However, as far as the second question was concerned, the CCI found that the eighteen sugar mills as well as ISMA and EMAI were guilty of bid-rigging, and thus contravened Section 3 of the Act..The chief rationale behind the finding was that the bidders could not offer a satisfactory explanation as to how they arrived at the same basic price and the Net Delivered Cost. Further, the fact that no plausible explanation could be offered by the bidders as to how the freight charges could match exactly despite substantial variance in distance between the distilleries of the bidders, led the CCI to come to the above-mentioned conclusion..In response to arguments that the findings were based on circumstantial evidence, the CCI held,.“…in respect of cases concerning cartels which are hidden or secret, there is little or no documentary evidence and the available evidence may be quite fragmentary. The evidence may also be wholly circumstantial. It is therefore often necessary to reconstitute certain details by deduction….…In the present case, the material on record clearly establishes that the bidders have acted in a collusive and concerted manner while quoting prices and quantities. In the absence of any logical or plausible explanation offered by the parties, the impugned conduct of the bidders when viewed collectively, shows that there was no other plausible explanation other than that the OPs have engaged in bid-rigging.”.Therefore, the Commission imposed a penalty at the rate of 7% of the average relevant turnover for the preceding three financial years arising out of the sale of ethanol pertaining to the opposite parties found to be guilty of bid-rigging..The following lawyers/law firms represented the parties before the CCI:.PartySenior AdvocateLawyers/Law FirmsIndia GlycolsManas K Chaudhuri, Sagardeep Rathi, Pranjal Prateek (Khaitan & Co)Jubilant Life Sciences LimitedKapil DuaISMAVikas SinghAmitabh Kumar, Samir Agrawal, Vibha Dhawan (J Sagar Associates)NFCSFAmitabh Kumar, Samir Agrawal, Vibha Dhawan, (J Sagar Associates)EMAIBhushan V MahadikBPCL, HPLC, IOCLML LahotiReeta Mishra, Mandakini Bajaj (Kochhar & Co), Nikhil Anand, Anchit SripatSahakari Khand Udyog Mandal Ltd, Shree Ganesh Khand Udyog Sahakari Mandli Ltd, Shri Kamrej Vibhag Sahakari Khand Udyog Mandli Ltd, Shree Mahuva Pradesh Sahakari Khand Udhyog Mandli LtdBhushan V MahadikThe Andhra Sugars LtdMA Chinnasamy, V Senthil KumarSarvaraya Sugars LtdSudipto Sircar, M Balanaga SrinivasBajaj Hindusthan LtdPawan Sharma, Nripi Jolly, Anuj Shah (AZB & Partners)Avadh Sugar & Energy LtdSudhanshu BatraPankaj BhagatTriveni Engineering Industries LtdRishi Agrawala (Agarwal Law Associates)Simbhaoli Sugars LimitedSushil ShuklaDhampur Sugar Mills LimitedAbdullah Hussain, Divye Sharma, Samarth Shergil (L&L Partners Law Officers)Balrampur Chini Mills LtdAS ChandhiokAbdullah Hussain (L&L Partners), Amitabh Kumar (JSA), Ritesh Kumar, Dipender Chauhan, Sameer AgrawalMawana Sugars LtdPK BhallaK M Sugar Mills LtdPankaj Bhagat, Sadre AlamUttam Sugar Mills LtdPankaj Bhagat, Shipra BhuttanDalmia Bharat Sugar & Industries LtdKaran Singh Chandhiok, Mahima Singh, Avdhesh Bairwa, Kalyani Singh (Chandhiok & Mahajan)Seksaria Biswan Sugar Factory LtdRavisekhar Nair, Sahil Khanna, Abhay Joshi (Economic Laws Practice)Sri Shadi Lal Enterprises LtdMM Sharma, Deepika Rajpal.Read the order:
