CI penalises 18 sugar mills and two trade bodies for rigging bids for ethanol bl

The Competition Commission of India (CCI) has imposed a Rs. 38 crore penalty on 18 sugar mills and two trade associations – Indian Sugar Mills Association (ISMA) and Ethanol Manufacturers Association of India (EMAI) – for rigging bids in joint tenders floated by public sector oil marketing companies (OMCs).

The case pertains to the notification issued by the Petroleum Ministry in 2013 mandating 5 per cent blending of ethanol with motor spirit or gasoline. Per the notification, the OMCs – IOC, Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) – had invited quotations from alcohol manufacturers for supply of ethanol through a joint tender dated January 2, 2013. The tender was issued by BPCL on behalf of the OMCs as the coordinator of the tender process, according to an official statement. The OMCs invited sealed tenders under the two-bid system – technical bid and price bid – from ethanol suppliers. The supply was to be made available to various depots/terminals of the OMCs across the country for one year with effect from March 1, 2013.

An informant, India Glycols Ltd., alleged that ISMA and EMAI persuaded the OMCs to come out with a joint tender for the purpose of procuring ethanol. The said joint tendering was alleged to be an agreement among players to procure ethanol from various suppliers in contravention of the provisions of Section 3 of the Competition Act, 2002.

Section 3 states that no enterprise, person or association shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.

Similar rates

The informant alleged that the sugar manufacturers participating in the joint tender manipulated the bids by quoting similar rates, and in some cases, identical rates through an understanding, collectively violating provisions under Section 3 of the Act.

The regulator, in its investigation, found that the bidders, who participated in respect of the depots located in UP, Gujarat and Andhra Pradesh in response to the joint tender floated by OMCs, were found to have acted in a concerted and collusive manner in submitting their bids.

“This was evidenced from the prices quoted, quantities offered and the explanations given by the parties. Such collusion was further strengthened from the fact that the bidders utilised the platform of ISMA and EMAI, which influenced the bidding behaviour of the parties,” CCI said in the statement.