The Competition Commission of India (CCI) has closed an inquiry it initiated against global commodity traders due to lack of sufficient evidence to establish cartelisation or action in concert by these agro-companies. 

In the final order issued on Thursday, this matter was closed, but the competition watchdog — considering the nature of agriculture trade and multi-faceted relations amongst the companies — directed them to take due care that their communications (between the players) do not transgress the permissible boundaries of the Competition Act.

The case related to alleged cartelisation by global commodity traders which led to an increase in the price of pulses in 2015-16.

The inquiry was initiated  suo moto by CCI based on an article published in the Economic and Political Weekly in July 2017. The article argued that increase in the prices of pulses in 2015-16 was a consequence of the formation of cartel by various global commodity trading companies.

Taking note of the article, CCI directed its investigation arm i.e. the Director-General (DG) to investigate the matter. 

Conducive environment

 While ordering investigation, CCI observed that the fall in production of pulses in 2015-16 had provided a conducive environment for easy manipulation by concerted act on the part of global agri-commodity traders through accumulation of pulses stocks, trading on the commodity market in a cohesive manner by taking long position. 

Such conducts was noted as controlling supplies in the market, besides indirectly determining prices of pulses, both in the spot market and future markets.

 During investigation, the DG raided units of global commodities trader Glencore (now Viterra), Edelweiss Commodities and ETC Agro in 2019.

On perusal of the material available on record, the Competition Commission observed that the investigation has not brought out any price parallelism among the opposite parties (OPs). The investigation has also not examined the role of global prices in determining domestic prices, the nuances of the industry and market dynamics, the CCI said.

The CCI has also noted that there also exists a buyer-seller relationship between various OPs and, in such a scenario, any interaction or exchange of any information amongst them need to be analysed keeping in mind the multifaceted relation among the different OPs. Against this backdrop, sporadic communications between the OPs exchanging information, which is already available in public information, cannot be constued as collusion between OPs, the CCI has said.