14 August 2013

CCI imposes penalty for near identical rates and quantity restrictions

Penalty at the rate of 5% of the average turnover was imposed by the Competition Commission of India (CCI) on various manufacturers of Polyester Blended Duck Ankle Boot Rubber Sole. Narrow range of difference in quoted prices, quantity restrictions by all the bidders barring one and limitations on order quantity per Direct Demanding Officer, were held, by the Commission, as indicative of pre-determined, collusive and restrictive bidding pattern or cartel formation by the bidders.  

The CCI observed that quotation of near identical rates (range of price differential in rates was only about 1%) by the firms though, in itself, is not conclusive and determinative of the issue, it was difficult to accept the explanation that since raw material and other costs for all the manufacturers were more or less same, their quoted prices were also almost same. It was noted that rates of major raw materials of the product were prone to fluctuations over a period of time. High difference in the rates of local taxes and different geographical locations, which could have affected the rate contract rate, but which in the facts of the case did not, was also considered by the Commission to term the rates as non-competitive.  

Sharing of a platform under the trade federation, by the opposite parties was also noted to hold violation of provisions of Section 3(1) read with Sections 3(3)(a) and 3(3)(d) of the Competition Act. Further, provisions of Section 3(1) read with Sections 3(3)(b), (c) and (d) of the Competition Act were also found to be violated as nine out of the 11 opposite parties had restricted their quantities to identical level while six had identical commitments per DDO, without any valid explanation. [Puja Enterprises – Competition Commission Order dated 6-8-2013 in Ref. Case No. 01 of 2012].


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