The Competition Commission of India (CCI) has issued a cease and desist order against eight firms found guilty of bid rigging and cartelisation in tenders floated by Eastern Railway from 2015 to 2019.
However, CCI refrained from imposing any monetary penalty considering the firms were MSMEs with limited staff and turnover, the cooperative and non-adversarial approach adopted by firms in acknowledging their involvement as well as the economic stress wrought upon the MSME sector in the wake of COVID-19.
CCI found these firms to have indulged in cartelisation in the supply of Axle Bearings to Eastern Railway using directly or indirectly determining prices, allocating tenders, coordinating bid prices and manipulating the bidding process. The evidence in the matter included e-mails, call detail records and the statements of the representatives of the firms. The e-mails exchanged showed that the firms discussed quantity allocation for the tenders of Indian Railways for the procurement of Axle Bearings. The vendors also discussed the compensation mechanism if some of them did not win the agreed quantities.
Furthermore, the Commission found that the opposite parties (OPs) stopped their cartel conduct immediately after the investigation began in the earlier matter (i.e. the case of 2018). Thus, the Commission considered this the mitigating factor for not imposing any monetary penalty and issued a cease and desist order against the firms.
Of the eight entities, two were lesser penalty applicants before the CCI. Under Section 46 of the Competition Act, a cartel member may approach the Commission by filing an application seeking a lesser penalty in return for providing full, true and vital disclosures regarding the alleged cartel to the Commission.
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