Dalmia Cement suffered a setback on Friday as a Division Bench of the Gauhati High Court comprising its Chief Justice Sandeep Mehta and Justice Susmita Phukan Khaund declined to stay a probe ordered by Competition Commission of India (CCI) in November 2020. The competition watchdog had in November 2020 ordered an investigation into the ONGC’s allegation of cartelisation against the bidders (which included Dalmia Cement) in the tenders floated by it for purchase of Oil Well Cement (OWC). 

Bid rigging in tender 

ONGC invited  bids for purchasing OWC for consignees located at different geographical locations during 2013-2018. However, as per the complaint filed by ONGC before CCI, Shree Digvijay Cement, Dalmia Cement and India Cements acted in concert and quoted either identical rates or cosmetically different rates and allocated the market amongst themselves, in contravention of the provisions of Section 3 of the Competition Act, 2002 which forbids anti-competitive agreements including cartelisation and bid rigging. 

Price Parallelism 

The probe was challenged by Dalmia Cement by filing a writ petition before Gauhati High Court by contending that CCI did not appreciate the fact that there were only a handful of suppliers of OWC in India and a mere price parallelism cannot be a ground to record a prima facie satisfaction to refer the matter for investigation. 

It also argued that the investigation arm of CCI transgressed the investigation order and conducted a roving and fishing inquiry and Dalima Cement was also not provided with vital documents. 

A single judge of Guahati High Court in June this year dismissed the plea filed by Dalmia Cement against which it preferred an appeal before the Division Bench which dismissed the appeal on Friday holding the same as ‘bereft of merits’. 

“It does not appear that CCI had conducted a roving and fishing enquiry and has transgressed its jurisdiction. A scrutiny of the notice reflects the nature of the investigation ordered by the CCI. The format of the notice however reflects that to cause the investigation certain information has been solicited by the CCI from the appellant. 

At this juncture, it cannot be held that the respondent no. 3 [DG CCI] has gone beyond the scope of the impugned order dated November 18, 2020 and has conducted a roving and fishing enquiry”, observed the High Court while dismissing the appeal.

“…..It is discernable from the impugned order of the CCI dated November 18, 2020 in case No. 35/2020 that an opinion was formed by the CCI on the basis of the information received from the respondent no. 4 – ONGC, after the documents provided by the ONGC were taken into consideration to express that in no uncertain terms the CCI is of the view that a prima facie case exists, requiring issuance of direction for investigation to the DG. 

The learned Single Judge was therefore reluctant to stay the operation of the notice. In the light of the decision of the Supreme Court of India in the case of Competition Commission of India Vs. Bharti Airtel Limited and Ors. (Supra), this Court is reluctant to adjudge the validity of such an order on merits”, added the High Court. 

However, the High Court directed CCI to provide Dalmia Cement copies of complete set of documents after excluding the documents for which confidentiality was claimed by ONGC, to give a proper opportunity of defence in the subsequent proceedings.

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