2026 (1) TMI 393 - AT - Law of Competition

Bid rigging in public tender bids-common IPs, call records and shared EMD led to s.3(3) breach upheld.

The dominant issue was whether the appellant and other bidders engaged in bid rigging/collusive bidding contravening s.3(3) of the Competition Act in a ... Cartelisation and bid rigging/collusive bidding in Tender floated by the Pune Zilla Parishad for supply of Picofall-cum-Sewing Machine - contravention of the provisions of Section 3 of the Competition Act, 2002 - persons/officers in charge of and responsible for the conduct of the business of the OPs concerned at the time of the said contravention - HELD THAT:- The allegations in the complaint/information were pertaining to the rigging in bids invited by Respondent No. 5 from eligible vendors for the purpose of procurement of Picofall-cum-sewing machine with ISI mark for distribution amongst certain classes of persons living in the rural area under some scheme of the State Govt. It is found that in order to arrive at a finding that the Appellant and other two Respondents were indulged in bid rigging / collusive bidding in respect of the impugned tender floated by Respondent No. 5 the Commission considered price parallelism and examined the rates quoted by the bidders and in para 40 of the impugned order has provided the rates quoted by bidders including the Appellant and the difference in rates quoted by them - The main argument which has been taken by the Appellant is with regard to the lowering of bid price by him, from Rs. 12,621/- to Rs. 12,521/- and further reduction of same to Rs. 12,250/- and also that had there been a cartelization or bid rigging there was no occasion for him to reduce quoted price any further. The NCLAT is agreed with the observations made by the Commission that the direct evidence of formation of any cartelization or bid rigging is seldom available. The conspiracies with regard to the such illegal acts are hatched in isolation and executed with precision and therefore it would only the circumstances by which the formation of cartelization or bid rigging may be inferred. The strong evidence of the close association of the Appellant with Respondent No. 3 and 4 and submission of the bids by using the same IP address of the Appellant and their close association on phone calls as well as through the CDR records and the fact that the EMD of the Respondent No.3 and 4 was managed by the appellant, clearly establishes that they were not fairly competitive with each other and rather they have formed a cartelization in order to bid rigging. It is also found that once an agreement as defined in Section 2(b) of the Act is established and found to be established in respect of the specified clauses of Section 3(3) of the Act then a presumption may be safely drawn with regard to the fact that such an agreement was having an AAEC and the onus in such scenario is shifted to the other party to rebut this presumption, once the burden has been discharged by the reliable evidence collected by the DG. Thus, keeping in view all the evidence and material which is available on record before the Commission, there are no illegality so far as the holding of the Appellant guilty in terms of Section 27(a) of the Act and the directions issued by the Commission therein, is concerned - having regard to the formation of illegal cartelization and gravity of the illegal act, commensurate and proportionate penalty has been awarded by the Commission - there are no good ground to interfere in the impugned judgment passed by the Commission and resultantly the appeal filed by the Appellant is hereby dismissed and the impugned order passed by the Commission is hereby affirmed. Appeal dismissed. Issues: (i) Whether the Appellant entered into an anti-competitive agreement/cartel and engaged in bid rigging in contravention of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002; (ii) Whether the penalty of Rs. 10,00,000/- imposed by the Commission is lawful and proportionate.Issue (i): Whether the Appellant participated in cartelisation and bid rigging in the tender proceedings, attracting liability under Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002.Analysis: The Tribunal examined the DG's primary and supplementary investigation reports and the evidentiary matrix relied upon by the Commission, including (a) narrow price differentials between bids (price parallelism), (b) use of a single IP address for filing multiple bids, (c) payment and refund trail showing EMD and tender fee payments made/managed by the Appellant on behalf of other bidders, (d) call detail records and mobile location data indicating close communications and presence, and (e) recurrence of similar conduct across other tenders. The Commission drew the statutory presumption under Section 3(3) where agreements of the specified category are established, shifting the burden to the Appellant to rebut AAEC. The Tribunal found the Appellant's explanations (cyber café/tender-filing service, subsequent price reduction, proximity of bidders) insufficient to plausibly explain the collective evidentiary picture, and accepted that direct evidence of conspiracy is rare and may be inferred from the cumulative circumstantial and forensic evidence presented.Conclusion: In favour of Respondent. The Tribunal upheld the finding that the Appellant, together with co-bidders, formed a cartel and engaged in bid rigging in contravention of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002.Issue (ii): Whether the penalty of Rs. 10,00,000/- imposed on the Appellant by the Commission is valid and proportionate.Analysis: The Tribunal reviewed the Commission's approach to calculating penalty, noting reliance on established principles (including the Supreme Court's guidance in Excel Crop Care) and the Commission's consideration of relevant turnover from the supply of sewing machines for the relevant period. The Tribunal found the penalty to be less than the statutory benchmark percentage and that the Commission had applied proportionality having regard to the nature and gravity of the contravention and relevant turnover figures made available by the Appellant.Conclusion: In favour of Respondent. The Tribunal upheld the imposition of the Rs. 10,00,000/- penalty as commensurate and lawful.Final Conclusion: The appeal is dismissed and the impugned order of the Commission holding the Appellant guilty of cartelisation and bid rigging and imposing a penalty of Rs. 10,00,000/- is affirmed; no interference is warranted.Ratio Decidendi: Where agreements falling within Section 3(3) are established by reliable evidence, a presumption of appreciable adverse effect on competition arises and the burden shifts to the accused parties to rebut that presumption; cumulative circumstantial, transactional and forensic evidence (price parallelism, single IP usage, payment/EMD trail, CDR/location data and recurrence across tenders) can suffice to establish such an agreement and justify a proportionate penalty.