Competition Commission slaps Rs 135 crore fine on three firms for 'hard core cartel'

Competition Commission of India (CCI) has imposed more than Rs 135 crore penalty on three firms for rigging bids and forming "hard core cartel" with respect to tenders floated by Maharashtra State Power Generation Company.

The ruling has come on a complaint filed back in 2013 wherein it was alleged that there was cartelisation in tenders related to coal liasoning works for various thermal plants floated by Mahagenco.

Apart from penalising them, the regulator has directed the three firms -- Nair Coal Services, Karam Chand Thapar & Bros (CS) and Naresh Kumar & Co to "cease and desist" from anti-competitive practices.

By "acting in a collusive and concerted manner which has eliminated and lessened the competition besides manipulating the bidding process" in respect of the tenders floated, the firms have violated competition norms, CCI said in its 59-page order.

These entities were found to have Section 3 of the Competition Act that pertains to anti-competitive agreements.

The case falls in the category of "hard core cartels" as the firms reached an agreement to submit collusive tenders and to divide the markets, CCI said, adding that the case deserves to be dealt with "utmost severity".

A fine of Rs 111.60 crore has been imposed on Karam Chand Thapar & Bros while Naresh Kumar & Co has to pay Rs 16.92 crore as penalty. Besides, Nair Coal Services has been penalised to the tune of Rs 7.16 crore.

The penalty is being levied at the rate of two times the total profits earned from provision of coal liasoning services extended to all power generators for continuance of the cartel for 2010-11 to 2012-13 period.

As per the order dated January 10, the three firms quoted identical basic rates in respect of the tender floated by Mahagenco in 2005 and also quoted rates in a manner that each of them could get the chosen thermal power stations.

The regulator said that the three firms have entered into an arrangement in respect of the tenders floated during the period 2005-13 whereby they not "only allocated the market but also rigged the bids".

An official release said that the Competition Commission of India (CCI) has deprecated the conduct of the informant -- one Surendra Prasad -- for breaching the confidentiality of the inquiry by circulating copies of the investigation report to B S N Joshi & Sons Ltd.

B S N Joshi is a rival of the three firms who have been fined and had forwarded the copies to various authorities, the release added.

Initially, when the matter of alleged cartelisation had come up, the CCI had closed the matter through a majority order in December 2013. However, that order was set aside by erstwhile Competition Appellate Tribunal and CCI's probe arm -- Director General (DG) -- was asked to investigate the matter.

The DG submitted its report to the regulator in June 2016.