2024 (4) TMI 176 - AT - Law of Competition

Appeal dismissed as company's five-year receipt of cartel emails without protest proves participation in bid rigging under Competition Act Sections 3(3)(a), 3(3)(c), 3(3)(d)

Sundaram Brake Linings Ltd, Mr S Balaji Sundaram Brake Linings Ltd, Mr P. Bose Sundaram Brake Linings Ltd Versus Chief Materials Manager, South Eastern Railway, Competition Commission of India

The NCLAT dismissed an appeal challenging cartelisation findings under Competition Act Sections 3(3)(a), 3(3)(c), and 3(3)(d) read with Section 3(1). The ... Anti-competitive agreements - Cartelisation - allegation is that appellant wrongly clubbed with members of the Cartel without any application of mind by the Commission - contravention of the provisions of Section 3(3)(a), 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act - HELD THAT:- In STATE OF MAHARASHTRA VERSUS KAMAL AHMED MOHAMMED VAKIL ANSARI & ORS. [2013 (3) TMI 731 - SUPREME COURT] it was held in a proceeding under the Competition Act, the strict rules of evidence are not applicable. Admittedly, all the statements are made by witnesses who were the authors/recipients of the emails and have confirmed their interaction with each other. Admittedly the appellant had never challenged the correctness of statements made by the other members and never sought a permission to cross examine them. All the evidence has been construed holistically by the Commission before giving its justification. The oral statements and the email are completely consistent with each other. Moreso in view of the very definition of cartelisation in Section 2(c ) of the Act, even an attempt to rig a bid is sufficient to attract the provision. In alleged anti-competitive conduct in the Beer Market in India, suo Motu Case No.6 of 2017 and in Federation of Corrugated Box Manufacturers of India etc, Case No.24 of 2017, it has clearly been held in bid rigging cases mere exchange of information is sufficient to attract the provisions of the Act. The Appellant argued it had never sent any such email and only ‘received’ such emails and mere ‘receipt’ of the emails does not amount to ‘exchange’ of emails, is not acceptable. The appellant continuously ‘received’ emails for over five years without any protest and never requested the cartel to stop sending such emails to it. This itself indicates a meeting of mind. More importantly, the evidence shows all the parties had access to the user name and password to the email id [email protected], hence it cannot be concluded the appellant was never a part of the Cartel. The appeal and all pending applications are dismissed. Issues:The appeal filed u/s 53B of the Competition Act, 2002 against an order dated 10.07.2020 in Reference Case No.03/2016 involving contravention of Section 3(3)(a), 3(3)(c), and 3(3)(d) read with Section 3(1) of the Competition Act.Issue 1: Allegations against Appellant No.1The learned counsel argued that the Commission erroneously found Appellant No.1 guilty of contravention of the Competition Act without proper evidence or admission. It was contended that Appellant No.1 was wrongly clubbed with the cartel members without any valid basis, and fundamental principles of competition law were not followed. The submissions on behalf of Appellant No.1 were not considered in the impugned order, despite disproving the allegations against it.Issue 2: Defense of Appellant No.1The main contention was that Appellant No.1 only submitted bids for tenders without discussing them with other cartel members. The admissions made by an employee of the appellant were argued to be unauthorized and not binding on the company. Witness statements from other individuals also supported the defense that Appellant No.1 was not part of the cartel.Issue 3: Evidence of Cartel ActivitiesConfessions of cartel members, including creating email accounts for communication, sharing bid prices, allocating quantities, and coordinating on tender bids, were presented as evidence. The statements of various witnesses implicated the appellant company in cartel activities, despite attempts to disown employee statements. Emails exchanged among cartel members further demonstrated the coordination and sharing of sensitive information.Issue 4: Membership in the CartelThe argument that mere receipt of information without active participation does not establish cartel membership was refuted. The evidence of cartelization, including consistent statements and email exchanges among members, indicated the appellant's involvement. The strict rules of evidence were deemed not applicable in competition proceedings, and even attempts to rig bids were considered sufficient to attract legal provisions.Issue 5: Dismissal of AppealIn light of the evidence presented, including the continuous receipt of emails without objection and access to shared email accounts, the appeal and all pending applications were dismissed. The exchange of information among cartel members, even without active participation from the appellant, was deemed sufficient to establish involvement in anti-competitive conduct.This summary provides a detailed breakdown of the judgment, highlighting the key arguments, evidence, and conclusions related to the issues raised in the appeal.