Case No. & Name Of The Court:
- Eastern Railway, through its Chief Materials Manager (Stores), Mr. Rakesh
Khare, referred this case under Section 19(1)(b) of the Competition Act, 2002,
claiming a violation of Section 3's rules. The informant hails from one of the
sixteen zones of the Indian Railways, which has its main office in Kolkata, West
Bengal. The OPs are Research Designs and Standards Organization (RDSO)-approved
suppliers working with the Indian Railways to produce and sell Plain Sleeve
Bearing - Top and Bottom Halves for axle bearings
- According to the informant, OPs (OP-1 to OP-6) engaged in cartel behavior or
an Anti-competitive agreement during the purchase of an axle bearing for a BHEL
traction motor used in railway EMU coaches. The Informant stated that it had
issued an open contract with the number 20/19/1830 and a deadline of 02.09.2019
for the purchase of 594 pairs of the aforementioned item. Out of the seven ICF-approved
vendors for providing the specified item, it was claimed that OP-1 to OP-6
participated and provided identical Total Unit Rates (TUR) and their breakdown.
- In its Investigation DG came to the conclusion that the six OPs-listed as OP-1
to OP- 6 in the Commission's prima facie order dated 02.02.2021-along with OP-7
and OP- 8, were all participants in the cartel. In violation of Sections 3(3)(a)
and 3(3)(d) read with Section 3(1) of the Act, they conspired and worked
together to determine the bid price stated in Eastern Railway tenders for the
supply of axle bearing issued between 2015 and 2019. The DG looked into the
situation, and on February 21, 2022, it gave the Commission its Inquiry Report.
- The application for grant of priority status under Regulation 5(2) of
2009, was sent via email by Mr. Krishnakant G. Singh, Partner of M/s Janardan
Engineering Industries (OP-6), on June 3, 2021 at 7:53 p.m. Additionally, Vaish
Associates, Advocates, on behalf of M/s Sriguru Melters & Engineers (OP-4), sent
the application via email on November 8, 2021 at 2:27:46 p.m. The Commission
transmitted these to the DG, who properly informed the applicants for the lesser
- The CCI noted that it could not be a coincidence that the prices the OPs
quoted in response to the tender were the same despite them being located in
different places, such as Kolkata, Hyderabad, and Mumbai, and possibly having
different costs for raw materials, labour, etc. The CCI took into consideration
all of the parties' statements and arguments. Additionally, CCI found that the
cartelization of the opposing parties has a noticeable negative impact on
- As a result, the Commission issued an order declaring that OP-1 to OP-8
had contravened the provisions of Section 3(3)(a) and 3(3)(d) of the Act
when taken in conjunction with Section 3(1). In light of the unique
circumstances of this case, the Commission decided not to impose any
financial penalties on the OPs
and their respective officials after carefully examining all the relevant
factors. The Commission acknowledged that the MSME sector in India is already
stressed and is suffering from the effects of the economic situation brought on
by the COVID 19 pandemic.
Case No. 02 of 2020, Competition Commission
Name Of The Parties:
Mr. Rakesh Khare (Informant)
Krishna Engineering Works (Opposite Party No. 1) M/s Chandra Brothers (Opposite
Party No. 2)
M/s Rama Engineering Works (Opposite Party No. 3) M/s Sriguru Melters &
Engineers (Opposite Party No. 4) M/s Chandra Udyog (Opposite Party No. 5)
M/s Janardan Engineering Industries (Opposite Party No. 6) M/s Jai Bharat
Industries (Opposite party No.7)
M/s V.K. Engineering (Opposite Party No. 8)
Rule Of Law:
- Issue No.1: whether there has been an agreement or arrangement amongst
the OPs to quote the same price/rate for the tender which led to the
contravention of the provisions of Section 3(3) read with Section 3(1) of
- Issue No.2: Whether OP-7 and OP-8 are involved in the matter and were
also the part of the cartel?
- Issue No.3: Was there Appreciable Adverse Effect on the competition due
to the cartelization or agreement of bid rigging between the opposite
- The Order was issued in accordance with Section 27 of the Competition
Act, which gives the CCI the authority to inflict penalties on organizations
engaged in anti- competitive behavior, such as abusing their dominant
position or making anti- competitive agreements. According to this clause,
the CCI may impose a fine on the entity if it considers it appropriate, but
the fine cannot exceed 10% of the average turnover for the entity's three
most recent financial years. It may even direct that all agreements be
changed in accordance with the order, abide by any additional orders that
the Commission may issue, and follow all other instructions, including
paying any associated costs.
- This matter was received as a reference under Section 19(1)(b) of the
Competition Act, 2002 from Eastern Railway through its Chief Materials
Manager (Stores), Mr. Rakesh Khare. Section 19(1)(b) empowers the commission
to inquire into any alleged contravention of provisions contained in section
3(1) or section 4 or on its own motion or on a reference made to it by the
Central Government or a State Government or a statutory authority.
- According to Section 26(1) of the Act, the Commission issued an order on
February 2, 2021, in which it expressed the opinion that there was a
presumptive basis for believing that the OPs had agreed to offer identical
prices in response to the aforementioned tender floated by the Informant, in
violation of Section 3(3). (d). According to Section 26(1), if the
Commission believes there is a prima facie case after receiving a referral
from the Central Government, a State Government, or a statutory authority,
or based on its own knowledge or information obtained under Section 19, it
must direct the Director General to induce an investigation into the
- Lesser Penalty Applications under Section 46 of the Act, applications
under Section 46 of the Act read with Regulation 5 of the Competition
Commission of India (Lesser Penalty) Regulations, 2009 (LPR, 2009) were
received in the Commission from OP- 4 and OP-6. According to Section 46, if
the commission identifies that a producer, seller, distributor, trader, or
service provider who is alleged to have violated Section 3 has made a full
and truthful disclosure regarding the alleged violations and that disclosure
is essential, a lesser penalty may be imposed on that producer, seller,
distributor, trader, or service provider as the commission sees fit. The
process for awarding the lower penalty is outlined in Regulation 5 of LPR,
- OP's have contravened provisions of Section 3(3)(a) read with Section
3(1) of the Act. Resultantly, the conduct of the OPs also amounts to
contravention of Section 3(3)(d) read with Section 3(1) of the Act. Section
3(1) states that No enterprise or association of enterprises or person or
association of persons enter into an agreement that substantially lessens
competition within India or that impacts the manufacturing, sale,
distribution, storage, purchase, or control of goods or the provision of
services. There shall not be appreciable adverse Effect on the competition.
Section 3 (3) states that any agreement made between enterprises or
associations of enterprises or persons or associations of persons etc.,
including cartels, that are involved in identical or similar trade of goods
or provision of services, which:
- directly or indirectly determines purchase or sale prices;
- directly or indirectly results in bid rigging or collusive bidding, then
it will fall under the ambit of Anti-Competitive Agreement.
The Competition Commission of India has stated that OP-1 to OP-8 have
contravened the provisions of Section 3(3)(a) and 3(3)(d) read with Section 3(1)
of the Act. It clearly means that the opposite parties have been in an
Anti-competitive agreement and have formed the cartel due to which even when
they were placed as different locations and there were diverse factors, they
came up with the identical bids. Hence, effecting the prices which they put.
Therefore, falling under the ambit of appreciable adverse effect on the
In October 2022, the CCI found eight axle bearing manufacturers namely Krishna
Engineering Works (Opposite Party No. 1), M/s Chandra Brothers (Opposite Party
No. 2), M/s Rama Engineering Works (Opposite Party No. 3), M/s Sriguru Melters &
Engineers (Opposite Party No. 4), M/s Chandra Udyog (Opposite Party No. 5), M/s
Janardan Engineering Industries (Opposite Party No. 6), M/s Jai Bharat
Industries (Opposite party No.7) and M/s V.K. Engineering (Opposite Party No.
8). Including their office bearers namely Mr. Vallabhaneni Venkata Ram of OP-1,
Mr. Vallabhaneni Chakrapani of OP-3, Mr. Biswanath Palit of OP-4, Mr.
Krishnakant Singh of OP-6, Mr. Naresh Garg of OP-7 and Mr. Sandeep Mehendale of
OP- 8, liable under Section 48 of the Act, guilty of indulging in a bid-rigging
cartel, in relation to the tenders floated by Eastern Railway between for the
procurement of axle bearings, in violation of Sections 3(3) of the Act.
The DG reported that, after reviewing the bids submitted by the OPs in the
tenders floated for axle bearing in the years 2012, 2013, 2014, 2015, 2016,
2017, 2018 and 2019, a pattern of largely identical or similar bids cited by the
OPs over the course of the previous eight years had been noticed.
The DG emphasized that OP-1 to OP-4 continued to submit revised offers even
after negotiations in the contested tender brought their initial bids down to
the same amount of Rs. 18,690/-, enabling them to divide the quantity given
among themselves. The DG observed that from 2012 to 2019, the OPs had an
arrangement, agreement, or plan to swap Axle Bearing quantities.
With respect to ISSUE NO.1, the Commission came to the conclusion that there
existed an Anti-competitive agreement between the OPs. Since no OPs filed this
break-up when placing their online bids. The only goal in doing this was to
maintain parity between their offers.
The Commission also observes that, surprisingly, the OPs quoted the same or a
very similar price in each of the tenders issued by Eastern Railway from 2012 to
2019 despite having separate manufacturing units in various locations with
distinct manufacturing costs, overhead costs, transportation costs, and profit
margins, as submitted by the OPs themselves.
There was regular phone communication between cartel members, and the OPs shared
commercially sensitive information through emails with one another, according to
tabulation statements and excel sheets that are available. However, these
documents do not show any other business motivations other than the desire for
coordinated and collusive action.
Additionally, OP-4 and OP-6 have acknowledged that this collusion was carried
out by exchanging Excel sheets with quantity, rates, and other information where
identical Bid values were chosen. Even OP-6 acknowledged in its statement that
there had been verbal agreements between rivals regarding Eastern Railway
tenders for some time and that it had spoken with other cartel participants.
Consequently, coming within the purview of sections 3(1) and 3(3) d.
With respect to ISSUE NO.2 the commission stated that, in relation to OP-7, the
Commission notes that Mr. Naresh Garg of OP-7 has admitted before the DG that he
had interactions with the other OPs and received e-mails from other OPs.
Further, he also admitted that he replied to those e-mails by correcting the
data with respect to his firm. Regarding OP-8, the Commission takes note of the
DG's analysis that the deponent joined the cartel in 2017 after receiving ICF
approval as a development vendor, but since Jai Bharat Industries was already a
Part-II RDSO approved vendor.
The existing cartel members would have given Jai Bharat Industries the
developmental order and told V. K. Engineering not to take part in the relevant
tender. In June 2019, Jai Bharat Industries was added to the Part-I RDSO
approved vendor roster. Following this, the cartel members chose to give V. K.
Engineering the developmental order. In view of the aforementioned, the
Commission believes that OP-8 did not come to the Commission with clean hands.
Therefore, Both OP-7 and OP-8 will be considered the Part of the Cartel.
With respect to ISSUE NO.3, Firstly, the Commission draws attention to the fact
that Section 3(1) of the Act's provisions prohibit not only agreements that
result in AAEC in the market but also agreements that are likely to do so. The
Commission also points out that once an agreement of the kinds listed in Section
3(3) of the Act is formed, it is assumed to have an AAEC in India. As a result,
it is obvious that the parties' contested behavior has led to AAEC in the
As a result, the CCI observed that axle bearing manufacturers used to keep track
of the distribution of tender quantities by maintaining and sharing excel sheets
etc. among themselves, which also helped in identifying the party who would be
submitting the cover bids.
Despite having different transportation costs and other costs, they were still
able to provide identical bid prices. Because they were all MSMEs who had been
negatively affected financially by the COVID-19 pandemic, CCI commanded axle
bearing manufacturers to stop and desist from engaging in such conduct but did
not apply any financial penalties because doing so would have forced some of
them out of business.
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