CCI | All India Sugar Trade Association alleged for circulating “price sensitive information” amongst cartel members

Competition Commission of India (CCI): The Bench comprising of Ashok Kumar Gupta (Chairperson), U.C. Nahta and Sangeeta Verma, Members, closed the matter in terms of Section 26(2) of Competition Act, 2002 on finding no contravention of provisions of Section 3(3) read with Section 3(1).

In the present case, Informant has alleged the contravention of provisions of Section 3(3) of Competition Act, 2002 by All India Sugar Trade Association (OP-1) and it’s Chairman (OP-2).

It has been alleged that OP-2 has been actively running discussion forums and chat groups with leading sugar traders/millers/refiners and other unknown persons on “Whatsapp”. It has been stated that the stated forum is being used in order to circulate “price sensitive information” like sugar prices and forthcoming policy changes by Government in relation to the sugar industry, which would directly impact the domestic sugar market.

Allegations that have been placed by the Informant against the OPs are as follows:

  • Collecting and disseminating pre-determined purchase price of sugar amongst cartel members through “WhatsApp” and SMS;
  • Restrict the market for other competitors whose bids are based on market forces;
  • Vitiate the tender process so that an enterprise floating the tender has no opinion but to accept the prices determined by OPs;
  • Control the supply of sugar in the market where it is sold to wholesalers and consumers;
  • Affecting player’s of the market in other states (U.P/Karnataka) who are selling/supplying sugar in the same market as the OPs because the former are compelled to lower the prices of sugar due to the elimination of market forces.

Analysis & Decision

Commission on inquiring on the basis of the allegation with respect to “price sensitivity” of data by the Informant found that it could not be addressed by the Informant. Informant had stated that the average prices at APMC were lower than prices on WhatsApp group which could only be a result of “Collusion”. Further, the Commission found no merit in the same.

With regard to the information purportedly exchanged on “WhatsApp” group, Commission observed that it is not clear from the records as to how such alleged acts can be said to have affected “free play of the market forces” with respect to sugar prices.

Commission went on to give the logic that, members of “WhatsApp” group also comprised of millers. There is no rationale as to how millers (as sellers) who have an interest in getting higher prices of sugar, as against that of traders, who want to procure at lower prices, would be agreeable to sell sugar at lower prices.

Furthermore, the sugar commodity is subject to provisions under the Essential Commodities Act, 1955 and orders issued thereunder and, thus, the final market price of sugar is dependent upon numerous factors.

Therefore in view of the above, the Commission finds no case of contravention or provisions against OPs. [Ravi Pal v. All India Sugar Trade Assn. (AISTA), Case No. 25 of 2018, Order dated 22-03-2019]

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