TaxTMI 
TaxTMI 
2023 (10) TMI 1479
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....respondent Nos. 1, 2, 3 and 4, for brevity. 2. Brief facts of this case are that an information u/s 19[1][a] of the Competition Commission Act, 2002 (the Competition Act for short) was filed before the respondent No. 2 by the respondent No. 4 [ONGC] on 31.07.2020 alleging cartelisation during the bidding process of four tenders floated by ONGC for the purchase of Oil Well Cement [hereinafter referred to as OWC] in the years 2013, 2015, 2017 and 2018. The aforesaid information was registered and numbered as Case No. 35/2020 against Shree Digvijay Cement Co. Ltd, Dalmia Cement Bharat Ltd (appellant herein) and India Cements Ltd as opposite parties No, 1, 2 and 3. The respondent No. 2, thereafter vide order dated 18.11.2020 in the purported exercise of powers u/s 26(1) of the Act formed a prima facie opinion that the appellant and some other cement manufacturing companies rigged through collusion /cartelisation four tenders for the supply of OWC to ONGC for the aforementioned years and fixed prices and allocated various consignees amongst themselves. It was observed by the respondent No. 2 that the appellant and some other cement manufacturing companies have prima facie violated prov....
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....riate writ which was registered as Writ Petition (Civil) No. 76/2022. 5. It is averred that certain crucial documents relied by the respondent No. 2 before passing the impugned order dated 18.11.2020 were not provided to the appellant despite repeated requests, which is against the principles of natural justice. 6. The appellant is aggrieved by the order of the learned Single Judge dated 28.06.2023 in WP(C) 76/2022, wherein, it was held that the impugned order dated 18.11.2020 passed by the Competition Commission of India was a well reasoned order. The operation of the notice dated 8.11.2021 was not interfered with, in the interest of facilitating a proper inquiry by the Director General (also referred to as Respondent No. 3 or DG). It is the fervent case of the appellant before the learned Single Judge that, if the order dated 18.11.2020 passed under section 26[1] of the Act is not stayed restraining the respondent Nos. 2 and 3 from proceeding further with the investigation, the reputation and commercial prospects of the company will be tarnished. The effect of an order of investigation under section 26[1] of the Act being very drastic inasmuch as an investigation against the p....
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.... both the bidders had formed a cartel, thereby defeating the very purpose of public tendering by resorting to unfair trade practices. When India Cements was qualified for tender No. 7, collusion between Shree Digvijay Cement, Dalmia Cement and India Cements emerged on scrutiny by ONGC indicative of some kind of concert or agreement amongst the same cement companies to share the market amongst themselves by way of geographical allocation. 7.3. It was also alleged by the ONGC that it floated tender No. 8 [ZNINC18001] dated 31.08.2018 and collusion between the three cement companies as bidders could be detected. A comparative statement of bids submitted by Shree Digvijay Cement, Dalmia Cement and India Cements in all the aforementioned four tenders depicted their parallel rate offering as submitted by ONGC. The respondent No.4/ONGC has alleged that based on the price bids submitted by the domestic bidders in response to tender Nos. 3, 5, 7 and 8, it became clear that the appellant/Dalmia Cement, Shree Digvijay and India Cements had colluded in submitting identical base rates, ex-works rate and FOR rate/unit qua most of the consignees destination and the OPs (Dalmia, Digvijay and Indi....
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....ating the fact that there were a handful of suppliers of the OWC in India and a mere price parallelism cannot be a ground to record a prima facie satisfaction of malpractices or anti-competitive conduct. Reliance in support of the above contention was placed on the Supreme Court Judgment in the case of Rajasthan Cylinders and Containers Limited Vs. Union of India and Anr., reported in (2020) 16 SCC 615, wherein, the Hon'ble Supreme Court held that mere price parallelism cannot be a ground for prima-facie conclusion of collusive agreement of bid rigging and thus, the respondent no. 2 ought not to have issued the direction under Section 26(1) of the Act, as there were no grounds for directing such an investigation. The petitioner/appellant had portrayed a strong prima facie case for grant of an interim order but the decision of Hon'ble the Supreme Court in Rajasthan Cylinders and Containers Limited (supra) has been misconstrued as the learned Single Judge held that this decision was not applicable in the present case, because the judgment and order in Rajasthan cylinder and Containers Limited (supra) was passed after a final order whereas, the instant case is at its initial stage. It....
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....nd reputation in the business world, even though, it may be exonerated later from such charges of anti competitive conduct. The appellant has thus prayed for an order to set aside/stay the order dated 18.11.2020 passed by the respondent No. 2/Competition Commission of India (CCI). Arguments: The respondents 13. Mr. T.J. Mahanta Senior Advocate argued on behalf of the respondents that the writ petition against the order under section 26(1) of the Act was filed at a premature stage. In the event respondent no. 2 decides to proceed further after receipt of a report from the respondent no. 3 with findings that there was contravention of any of the provisions of the Act, the appellant can avail the remedy of appeal under Section 53A of the Act. It has further been submitted by the respondents' counsel that the information under Section 19(1) of the Act of 2002 more particularly Annexure-1 of writ petition was forwarded by the respondent No. 4 against the opposite parties i.e. O.P. No. 1 Shree Digvijay Cement, O.P. No. 2 Dalmia Cement, and O.P. No. 3 M/s India Cements Limited. Thereafter, notices were issued against the opposite parties and the impugned order dated 18.11.2020 w....
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....similar base rates, ex-works rate, FOR rate/ unit etc were culled out for the purposes of conciseness. 15.1. The Commission, CCI considered the information (dated 31.07.2020) in its ordinary meeting held on 27.10.2020. The CCI has also inter- alia observed that the cement market is subjugated by few players and is thus prone to cartelisation. The OWC is a special kind of cement, used to fill the space between the well walls and steel lining tubes and the cements sets slowly to give the slurry time to reach a larger depth of the oil well and develop strength for stability in high temperature. As there are few suppliers of OWC in the market, it becomes easier for the cement companies to coordinate their conduct. The Commission had analysed the facts and allegations presented in the information. 15.2 It was observed by the Commission that the comparative prices [Base rates as well as FOR rates] quoted by Shree Digvijay and Dalmia Cements in the impugned Tender No. 3 (2013) appears to be the same for the locations covered by the Mumbai Port, Chennai Port and Kolkata Port except Kolkata MBA. It was also decided by the Commission, CCI that the comparative prices relating to tender No. ....
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.... contravention of the provision of Section 3 of the Act." 17. The Commission then directed the Director General to cause an investigation to be made into the matter under the provisions of Section 26[1] of the Act and to submit report within a period of 60 days from receipt of the direction. With respect to violation of the provisions of Section 3 of the Act, the Director General/respondent no. 3 was also directed to investigate into the role of the persons/officers who were in charge of and responsible for the conduct of the activities of such entities, who may be found to have indulged in anti- competitive conduct at the time the alleged contravention was committed as well as persons/officers in whose consent or connivance the alleged contradiction was committed, in terms of the Section 48 of the Act. Consideration of submission 18. We have given a thoughtful consideration to the submissions made at the Bar. It has been aappositely held by the learned Single Judge that the decision of Hon'ble the Supreme Court in Rajasthan Cylinders and Containers Limited (supra) was rendered on appeals filed against orders passed by the Competition Appellate Tribunal, whereby the Competition ....
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....s submitted by the appellant that the company's reputation is at stake. It is submitted that if the companies' reputation is marred, it could adversely impact its future business prospect. 20. The ONGC-respondent no. 4 had forwarded all the comparative statements of the pricing bids and the tender processes pertaining to the four tenders of 2013, 2015, 2017 and 2018. The figures tabulated relating to the bidding process of the four tenders have been scrutinized by the CCI. These figures were also elaborately discussed and dealt with by the learned Single Judge while passing the order dated 28.06.2023 in connection with WP(C) 76/2022. The appellant is silent about these facts and figures. 21. Apart from offering a bald denial, the appellant has failed to refute these statements at this preliminary stage. Interference into the merits of the case without specific denial by the appellant is not warranted at the initial stage. In case the appellant's company is exonerated from the allegation of rigging and cartelization, it can regain uphold its reputation. 22. The complaint/information and the case no. 35/2020 initiated on the information by the ONGC-respondent no. 4 does not appear....
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....bserved that:- "97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub- sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of....