Competition Commission of India (CCI): Noting that in respect of cases concerning cartels that are hidden or secret, there is little or no documentary evidence and may be quite fragmentary, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) imposed penalties on 7 entities and signages for bid-rigging activities and cartelization with respect to the supply of signage for branches, offices and ATMs of State Bank of India.
Present matter was taken up by the Commission suo motu pursuant to a complaint received alleging bid-rigging and cartelization in the tender floated by SBI Infra Management Solution (P) Ltd. for the supply and installation of new signages/replacement of existing signages for branches/offices/ATMs of SBI located at specified metro centres of various circles of SBI across India.
With the object of distorting the fair bidding process, certain bidders were coordinating and fixing the prices of their services as well as allocating the market amongst themselves.
As per Commission’s prima facie view, case of contravention of the provisions of Section 3(1) read with Section 3(3) of the Act was made out with respect to the Impugned Tender. Hence, DG was directed to investigate.
DG had concluded that the OP indulged in anti-competitive agreement/conduct and concerted practices to rig the Impugned Tender, as well as geographically allocated amongst themselves the circles for which the tender was issued, thereby contravening the provisions of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. The DG also identified certain individuals of the OPs to be liable in terms of Section 48 of the Act.
An ‘agreement’ as given in Section 2(b) of the Act, requires, inter alia, any arrangement or understanding or action in concert, whether or not formal or in writing or intended to be enforceable by legal proceedings.
Definition under Section 2(b) of the Act covers even those situations where the parties act on the basis of a nod or a wink.
Further, it was observed that there is rarely direct evidence of action in concert, Commission must determine whether those involved in such dealings had some form of understanding and were acting in co-operation with each other.
“Since the prohibition on participating in anti-competitive agreements and bid rigging and the penalties which the infringers may incur are well-known, it is normal for such practices and agreements to take place in a clandestine fashion, for meetings to be held in secret and for associated documentation to be reduced to a minimum.”
Commission held that OP-1 to OP-7 had entered into an agreement resulting in geographical market allocation as well as bid-rigging in the Impugned Tender.
“…cartelisation, including bid-rigging, is a pernicious form of competition law contravention.”
Additionally, Coram also added that, any collusive or concerted conduct amongst competitors by way of exchange of commercial information resulting in inter alia determining price or geographical allocation of provision of services etc., itself stands captured within the prohibition imposed and is presumed to have AAEC, by virtue of provisions of Section 3(1) of the Act read with Section 3(3).
Liability under Section 48
Commission held that it is no longer res integra that the Commission can simultaneously proceed against individuals of a company under Section 48 of the Act along with the company and the same has been settled by various decisions of the Courts.
Section 48(1) of the Act is a deeming provision, which implies that when contravention of any provision of the Act (say Section 3) is committed by a company, then, an individual(s) who was in-charge of and responsible to the company for the conduct of its business at the time of contravention, shall be deemed to be guilty of such contravention.
Section 48(2) of the Act, all individuals that play an active role in the illegal conduct of a company, are made liable in addition to the company.
Commission decided to impose penalty @1% of the average of individual’s incomes, for the three financial years. Though Commission decided to grant to OP-4 and its individuals, the benefit of reduction in penalty by 90% (per cent) in terms of Regulation 4(a) of the Lesser Penalty Regulations.
Lastly, the Coram directed entities/persons to deposit their respective penalty amounts within 60 days of the receipt of the present order.[Alleged anti-competitive conduct by various bidders in supply and installation of signages at specified locations of State Bank of India across India, In Re., 2022 SCC OnLine CCI 16, decided on 3-2-2022]
Advocates before the Commission:
For Diamond Display Solutions Pvt. Ltd. and its individuals:
Mr. Rajshekhar Rao, Senior Advocate with Ms. Ameyavikrama Thanvi and Mr. Siddharth H. Raval, Advocates and Mr. R.G. Venkatesh (in-person)
For AGX Retail Solutions Pvt. Ltd and its individuals:
Ms. Shivanghi Sukumar, Advocate, Mr. Arjun Reddy and Mr. Ritanshu Mohan (both in-person)
For Opal Signs Pvt. Ltd. and its individuals:
Mr. Anandh Venkatramani, Advocate and Mr. Ramesh Bharadwaj (in-person)
For Avery Dennison India Pvt. Ltd. and its individuals:
Mr. Rudresh Singh, Advocate
For Amreesh Neon Pvt. Ltd. and its individuals:
Mr. Anjaneya Mishra, Advocate
For Macromedia Digital Imaging Pvt. Ltd. and its individuals:
Mr. Rajshekhar Rao, Senior Advocate with : Mr. Nithin Chowdary Pavuluri, Advocate and Mr. Naresh Kumar Dasari (in-person)
For Hith Impex Pvt. Ltd. and its individuals:
Ms. Rohini M. Amin, Advocate