CCI Holds Two Textile Firms Guilty Of Bid Rigging In Defence Undergarment Tender

The Competition Commission of India (CCI) has found textile manufacturers KKK Mills and Sankeshwar Synthetics Pvt Ltd guilty of bid rigging in a defence procurement tender for woollen underpants floated by the Directorate General of Ordnance Services.The competition watchdog found the firms to be in contravention of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002, which prohibit anti-competitive agreements and specifically outlaw bid rigging and collusive bidding.The Order follows an investigation into collusive bidding and price parallelism in tenders by the Directorate General of Ordnance Services (DGOS). It stated that the firms created a cartel by quoting identical prices in two separate tenders floated by the DGOS.Section 3 of the Act prohibits anti-competitive agreements, making void any contract that causes or is likely to cause an appreciable adverse effect (AAEC) on competition in India. A coram led by Chairperson Ravneet Kaur, along with Members Anil Agrawal, Sweta Kakkad and Deepak Anurag, held that, “in the present case, there are other plus factors apart from price parallelism as discussed above which indicate that the OPs have engaged in bid rigging/collusive bidding thereby, violating the provisions of Section 3(3)(d) of the Act.”The CCI chose not to impose monetary penalties, noting the firms' MSME status, the cancellation of the tender, and the difficulty in determining relevant turnover. Instead, it directed the entities and individuals to cease and desist from engaging in any such anti-competitive practices in the future, warning that any recurrence would invite aggravated consequences. The case arose from a reference made by the CP Cell of the Master General of Ordnance branch after an initial tender issued by it in July 2019 was cancelled due to suspicion of price parallelism and cartelisation by the firms. In that tender, both firms had quoted an identical price of Rs. 127.90 per unit. A re-tender floated in November 2020 again saw both bidders quoting the exact same rate of Rs. 122.75, triggering an investigation by the commission's Director General in 2019.The firms defended their conduct as a coincidence, arguing that the market was an "oligopsony" where the Ministry of Defence is the sole purchaser and raw material costs are "almost equal for everyone". They further contended that the mere existence of price parallelism is insufficient to hold the parties liable. The CCI noted that the firms not only quoted identical prices up to two decimal points on both occasions but also submitted their bids within minutes of each other, well before the closing deadlines. It held that such repeated and synchronised conduct could not be a mere coincidence or price parallelism. Relying on evidence including email exchanges, call data records and business linkages with related entities, the CCI concluded that the companies had pre-arranged prices and coordinated their participation in government tenders, resulting in an appreciable adverse effect on competition. The Commission also held Vikas Gupta, Partner of KKK Mills, and Anuj Jain, Director of Sankeshwar Synthetics, liable under Section 48 of the Act, observing that both individuals were actively involved in the conduct of the companies' business and had full knowledge of the tendering process. Case Title: In Re: CP Cell, Master General of Ordnance Service v. M/s KKK Mills & Anr. Case Number: Ref. Case No. 01 of 2021 For CP Cell, Directorate General Ordnance Service: Harikesh Pratap For KKK Mills: Advocates Utsav Mukherjee, Bhaskar and Vikas Gupta For Sankeshwar Synthetics Pvt Ltd: Advocates Pulkit Agarwal, Anas Chaudhary and Anuj Jain Click Here To Read/Download Order

CCI Holds Two Textile Firms Guilty Of Bid Rigging In Defence Undergarment Tender

Kirit Singhania

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