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Reprographic India, New Delhi Vs. Competition Commission of India and Ors. - (NATIONAL COMPANY LAW APPELLATE TRIBUNAL) (26 Feb 2019)

Unless a prima facie case exists, Informant has no vested right to seek investigation into alleged contravention of provisions


MRTP/ Competition Laws

The Appellant is aggrieved of order dated 9th November, 2018 passed by the Competition Commission of India (CCI) under Section 26(2) of the Competition Act, 2002 in Case No. 41 of 2018 whereby and whereunder CCI closed the information filed by the Appellant alleging that during the entire bidding process, Respondents acted in collusion and thereby rigged the process causing huge loss to public exchequer. CCI observed that, a prima facie case under the Competition Act, 2002 was not made out against the Respondents as the case of Appellant Informant lacked reasonable allegations based on any concrete evidence.

The issue arising for determination is whether the CCI erred in undertaking an exercise itself to determine whether or not the allegation of inter-alia collusive bid rigging levelled against Respondent Nos. 2 & 3 has been established without ordering an investigation in terms of Section 26 (1) of the Competition Act, 2002.

Agreement postulates meeting of minds. The Informant shall have to lay evidence, direct or circumstantial, before the CCI that an agreement was entered into between such enterprises, persons or their associations engaged in identical or similar trade in respect of the prohibited activity which resulted in bid rigging or collusive bidding. It is only then that such agreement can be presumed to have an appreciable adverse effect on competition.

CCI is empowered to inquire into any alleged contravention of provisions contained in Section 3(1) or Section 4(1) of the Competition Act, 2002 on its own motion or on receipt of an information from any person, consumers or their associations or trade associations or upon a reference made to it by the Central Government, State Government or Statutory Authority. Section 26 of the Act provides that upon receipt of a reference or upon its own knowledge or upon information received from any person, the Commission, if of opinion that there exists a prima facie case, shall direct the Director General (DG) to cause an investigation to be made into the matter. On a bare reading of this provision, it is abundantly clear that causing of investigation to be conducted by Director General is entirely dependent on existence of a prima facie case warranting such investigation.

Unless the Commission is satisfied that a prima facie case exists, the Informant (where information has been received from any person) has no vested right to seek investigation into alleged contravention of provisions Section 3(1) or Section 4(1) of the Act. The Informant has to demonstrate that there is substance in the allegations levelled in the information and he will fairly succeed in establishing that the Respondents are engaged in anti-competitive agreements. Raising of competition concerns on the strength of bald allegations without any shred of evidence would not absolve the Informant of his obligation to make out a prima facie case warranting causing of investigation by DG. It is indisputable that, direct evidence would seldom be available in cases of bid rigging or collusive bidding. However, inference of complicity in anti-competitive activities would be available only on the basis of proved facts.

Merely because the bidders while exercising their choice of quoting products, opt for a particular manufacturer, which may be attributable to a variety of factors, would not necessarily justify meeting of minds. This observation equally applies in the facts and circumstances of instant case where Respondent No. 2 emerged as L-1 in the bidding process while he was found to have quoted quite a few products of HP for Group-A Items. The successful bidder had not only the choice to quote product of a particular OEM but also was required to attend to the service and maintenance besides providing spare parts etc. during the entire lease period. The choice for a particular product may have emanated out of this consideration as well.

The Respondent No. 2 was entitled to exercise his choice of quoting products of a particular manufacturer so long he did not come in conflict with the terms and conditions of the tender. There may have been business linkages inter-se Respondents 2 and 3 but in absence of any material to suggest that these Respondents were engaged in the practice of bid rotation, no adverse inference suggestive of collusive bidding could be drawn against them.

The Appellant - Informant who was neither an OEM nor an SI and was not in the fray for bidding qua the tender in question raised competition concerns on the basis of wild allegations without any substance. The circumstances projected by him, in absence of any incriminating evidence, would not justify drawing inference of complicity of Respondents 2 and 3 in bid rigging/collusive bidding. The Appellant-Informant has miserably failed to make out a prima facie case warranting causing of an investigation by DG. The impugned order passed by the Commission is based on application of mind and does not suffer from any legal infirmity. The appeal is dismissed.


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