Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The CCI has passed final order in two cases involving bid rigging/collusion in three tenders floated by Pune Municipal Corporation for Design, Supply, Installation, Commissioning, Operation and Maintenance of Municipal Organic and Inorganic Solid Waste Processing Plant(s). These cases were taken up by CCI suo motu under Section 19 of the Act based on the disclosure by firms under Section 46 of the Competition Act, 2002 (‘the Act’) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’). All firms in these cases had approached CCI as lesser penalty applicants.

While in one case, the tenders pertained to Financial Year 2013-14, in other case the tender pertained to Financial Year 2014-15. From the evidence gathered during investigation, CCI found that there was bid rigging/collusive bidding in the Tender Nos. 21 and 29 of 2013 and Tender No. 59 of 2014 floated by Pune Municipal Corporation for Solid Waste Processing Plant(s), in contravention of Section 3(3)(d) read with Section 3(1) of the Act by way of submitting proxy/ cover bids.

In case involving tender floated in Financial Year 2013-14 penalty was imposed on four firms in terms of Section 27(b) of the Act at the rate of 10 percent of their average turnover for the years 2011-12, 2012-13 and 2013-14 i.e. three years preceding the year in which collusion took place. An amount of INR 46.45 Lakhs was imposed on Saara Traders Pvt. Ltd. (Saara), INR 33 Lakhs on Ecoman Enviro Solutions Pvt. Ltd. (‘Ecoman’), INR 11 Lakhs on Fortified Security Solutions (‘Fortified’) and INR 26.40 Lakhs on Raghunath Industry Pvt. Ltd. (‘Raghunath’). The penalty was also imposed on individual officials of three firms, namely, Saara, Ecoman and Raghunath at the rate of 10 percent of their average income for the same three years. No penalty was imposed on individual of Fortified as it is a proprietorship firm. Further, in view of penalty already levied in Case No. 50 of 2015 for infringement during the period 2014-15, no penalty was levied in case involving tender floated in financial year 2014-15.

Keeping in view the modus operandi of the cartel, the stage at which the lesser penalty application was filed, the evidences gathered by the DG independent of lesser penalty application and co-operation extended in conjunction with the value addition provided in establishing the existence of cartel, CCI granted 50 percent reduction in penalty to Saara and its individuals than otherwise leviable. Pursuant to reduction, penalty imposed on Saara was INR 23.22 Lakh and INR 74,513 on its individual. [In re, Cartelization in Tender Nos. 21 and 28 of 2013 of Pune Municipal Corporation for Solid Waste Processing, Suo Motu Cases Nos. 03 and 04 of 2016, decided on 31.5.2018]

Case BriefsHigh Courts

Bombay High Court: A Division bench comprising of Anoop V. Mohta and Bharati H. Dangre, JJ. heard a petition filed in relation to a tender process for supply of various drugs including one Human Anti-Hemophilic Factor VIII, issued by the respondent State in which the petitioners participated. The tender restricted participation from manufacturers/ distributors for the product for which it had been found guilty of malpractice, misconduct or had been debarred/ blacklisted by Maharashtra’s Public Health Department or any other local authority or Central or State Government organization.

The petitioners received a communication that they had been blacklisted for Anti-Hemophilic Factor VIII by State Health Society, Bihar. The petitioners responded with a copy of the order, stating that they had been “de-blacklisted” but de-registered for the next five years for not being able to supply required quantity of AHF within prescribed time. However, the aforementioned explanation was not considered and the petitioners were denied participation in the bid even though they were eligible to.

The Court held that the communication debarring petitioners in the tender process was unjust and unsustainable. De-registration could not be considered as indicative of malpractice or misconduct and there was no surviving case even of blacklisting. Therefore, the petitioners were held entitled to participate in the tender process and the respondents were directed to consider the petitioner’s bid as responsive. [Reliance Life Sciences Pvt. Ltd. v. State of Maharashtra, 2017 SCC OnLine Bom 7266, dated 02.08.2017]