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India – CCI Penalises Three Railway Parts Providers For Bid-Rigging.

24 March, 2014

 


On February 5, 2014, CCI fined three railway part providers, M/s Stone India Limited (‘SIL’), M/s Faiveley Transport Rail Technologies India Limited (‘FTRTIL’) and M/s Escorts Limited (‘EL’), for rigging bids in response to a tender floated by a department of Indian Railways, Government of India (‘GoI’) to procure feed valves used in diesel locomotives.


CCI noted that the identical price quoted by SIL, FTRTIL and EL was a very strong indicator of a possible collusion, since there was an absence of economic justification. This was supplemented by the fact that the manufacturing units of the three companies were located in different places. This should have resulted in a difference in the cost of production. CCI also opined that since direct evidence may not be available to establish collusion, only standard of “preponderance of probabilities” must be satisfied.


CCI further rejected the argument for leniency raised by the parties based on past bidding behaviour of the companies. In doing so, they distinguished between “first time contraventions” and “first time established contraventions”.


Accordingly, CCI held that all the bidding companies have infringed the provisions of Section 3 of the Act and must be held equally responsible. Therefore, a penalty at the rate of 2% of the average turnover for the preceding three financial years was imposed on each of the bidding companies. SIL, FTRTIL and EL were directed to pay a penalty of INR 19.1m, INR 57m and INR 547m respectively. Cumulatively, the penalty amounted to INR 623.1m.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 

percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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