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2013 (5) TMI 215 - COMPETITION COMMISSION OF INDIAApplication u/s 19(1)(b) of the Competition Act, 2002 – Manipulation of tender – Bid rigging - Formation of cartel - Tender notice of rail lines was floated by South Eastern Railway for procurement of Anti-Theft Elastic Rail Clips with Circlips from RDSO approved firms, 29 firms submitted offer. The rate quoted by most of the firms was @ 66.50 (all inclusive). The quantity quoted by each of the firms was far less than 50% of the total tender quantity. It is also alleged that the quoted rate was about 10% higher than the neighboring Railways' last purchase rate. Suspecting cartelization by the bidders in fixing the price and distributing the tender quantity of the materials amongst themselves, the instant reference has been filed by Principal Chief Engineer, South Eastern Railway. Held that:- It may be noted that in the Instruction to Tenderer and General Conditions of Tender, it was provided that wherever all or most of the approved firms quote equal rates and cartel formation is suspected, Railways reserve the right to place order on one or more firms to the exclusion of the rest without assigning any reasons thereof. Further, it was provided therein that firms were expected to quote for a quantity not less than 50% of tendered quantity. Offers for less than 50% quantity were to be considered unresponsive and liable to be rejected in case cartel formation was suspected. In the result, the Commission is of the view that conduct of the opposite parties amounts to bid rigging within the meaning of the said expression as given in explanation to section 3(3) of the Act as the impugned agreement being an agreement between enterprises or persons engaged in identical or similar production or trading of goods or provision of services, had the effect of eliminating or reducing competition for bids/ adversely affecting or manipulating the process for bidding. As regards penalty u/s 27 of the Act, the Commission notes that there are circumstances in this case which require the issue of penalty to be looked into somewhat differently. The facts as projected in the present reference reveal a complete lack of awareness by the opposite parties which are small and micro enterprises. Thus, right in the beginning the offers made by these parties were not in accordance with the requirement of the tender and hence they could not have got supplies as per the tender conditions. Moreover, the bid given by these parties was not the lowest and so they could not have been awarded the contract.
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