COMPETITION APPELLATE TRIBUNAL

NEW DELHI

APPEAL No.10 of 2016

AND
I.A. No. 29 of 2016
[Under Section 53-B of the Competition Act, 2002 against order dated
08.09.2015 passed by the Competition Commission of India in Case No. 06
of 2013].

CORAM

Hon’ble Shri Justice G.S. Singhvi

Chairman

Hon’ble Shri Rajeev Kher

Member

In the matter of :

Deputy Chief Materials Manager,

Rail Coach Factory,
Kapurthala, Punjab. … Appellant

Versus

1. M/s. Faiveley Transport India Ltd.,

P.B. No.39, Harita,
Hosur, Tamil Nadu.

2. M/s. Knorr Bremse India Pvt. Ltd.,

14/6, Mathura Road,
Faridabad, Haryana. … Respondents

Appearances : Shri Puneet Agrawal, Advocate for the Appellant with

Shri Darshan Kumar Kingra, Deputy Chief Materials
Manager

ORDER

This appeal is directed against order dated 08.09.2015 passed by

the Competition Commission of India (for short, the ‘Commission’) in

reference Case No.06 of 2013, whereby it was held that the evidence

relied upon by the Director General (DG) is not sufficient for holding that

the Opposite Parties (Respondents herein) are in contravention of the

provisions of the Competition Act, 2002 (for short ‘the Act’) and closed the
 2

case.Along with the appeal, the appellant has also filed I.A. No.29 of 2016

for condonation of six days’ delay.

2. Till 1995, the maximum speed of the passenger trains in India was

110 kmph. The coaches for these trains were/ are being manufactured

by the Railways in its factories at Chennai, Kapurthala etc. by using

Bogie Mounted Tread Brake System (BMTBS), which is fitted on every

wheel of the train including those of the locomotive.In 1995 and

thereafter, trains like Rajdhani, Shatabdi and Durontowith more than

110 kmphspeed were introduced in the country. In the beginning, the

coaches for these trains {Linke-Hofman-Bush (LHB) design} were

imported from Germany. These coaches were fitted with Axle Mounted

Disk Brake System (AMDBS) manufactured by Knorr Bremse Germany

(parent company of Respondent No.2 M/s. Knorr Bremse India Pvt. Ltd.).

After sometime, the Railways started manufacturing LHB coaches under

the technology transfer agreement.For these coaches, AMDBS were

initially supplied by Respondent No.2with two specifications i.e. PL

33501427 and PL 33501439 (for the sake of convenience the same shall

hereinafter be referred to as ‘Item Nos.1 and 2’). In 2000, Respondent

No.1, which is a wholly owned subsidiary of Faiveley Transport Malmo

AB, Sweden, also started manufacturing and supplying AMDBS to the

Railways for LHB coaches.

3. In last nine years, Respondents Nos. 1 and 2 have supplied the

following quantities of AMDBS to the Indian Railways through open

tendering system :

Year Item 1 Item2 Tender value

 3

Rs. Cr.
2005 147 19 40.82
2007 86 13 19.56
2008 130 23 32.27
2009 201 28 49.80
2010 325 47 87.95
2011 449 60 113.72
2012 638 88 171.56
2013 176 17 44.97
2014 197 0 45.07

4. During these years, some developmental orders were placed by the

Railways on other parties but no other manufacturer succeeded in

developing and supplying AMDBS and the respondents continued to be

the only suppliers.

5. In 2010, the appellant floated a tender for regular purchase of

AMDBS. Respondents Nos.1 and 2 submitted their bids. The tenders

were opened on 01.10.2010 and it was found that the respondents had

quoted the following rates :

Sl. Firm’s Description Basic ED ST All inclusive

No. Name rate Rs. rate Rs.
1. Knorr (Item 1) 21,85,971.46 Inclusive Inclusive 21,85,971.46
Bremse @5.25%
India (Item 2) 28,71,396.61 28,71,396.61

2. Faiveley (Item 1) 21,96,043.50 Nil Inclusive 21,96,043.50

Transport @5%
(Item 2) 28.89,043.50 28,89,043.50

6. Thereafter the Tender Committee held negotiations with

Respondent No.2, whose rates were the lowest. In the negotiations,

Respondent No.2 offered the following reduced rates :

“Item 1 – Rs.21,64,111.74 (inclusive of duties and taxes).

Item 2 – Rs.28,42,662.84 (inclusive of duties and taxes).”

 4

7. After processing the matter, the Tender Committee submitted

recommendations to the Railway Board on 23.05.2011 for approval by the

Competent Authority, i.e., the Minister of Railways.The Railways Board

referredthe matter back to the Tender Committeeon 01.06.2011 and

sought certain clarifications. The latter resubmitted the

recommendations on 25.06.2011 with replies from officers of Rail Coach

Factory, Kapurthala. The Railway Board once again referred the matter

back to the Tender Committee on 24.10.2011 with the remark that there

should be adequate price reduction. Thereafter, the Tender Committee

held another round of negotiations with Respondent No.2 and

resubmitted thematter to the Railway Board with the remark that

Respondent No.2 was not inclined to offer further reduction in the rates.

The Railway Board once again returned the file to the Tender Committee

on 16.02.2012 with certain queries.

8. In the meanwhile, the appellant issued three emergency tenders at

short intervals to meet the urgent requirement of AMDBS. These tenders

(EP1, EP2 and EP3) were opened on 13.06.2011, 24.08.2011 and

08.12.2011 respectively and orders were placed on both the respondents.

9. In 2012, the Competent Authority floated another tender for regular

supply of AMDBS. This time, the respondents quoted the following rates :

Sl. Firm’s Description Basic ED ST All inclusive

No. Name rate Rs. rate Rs.
1. M/s. (Item 1) 23,48,708.25 Nil Inclusive 23,48,708.25
Faiveley @5%
Transport (Item 2) 31,87,779.00 31,87,779.00

2. M/s. (Item 1) 23,61,113.53 Inclusive Inclusive 23,61,113.53

Knorr @5%
Bremse (Item 2) 32,02,080.29 32,02,080.29
India
 5

10. The bids submitted by the respondents in response to the second

regular tender were opened on 30.01.2012. Thereafter, the Tender

Committee deliberated upon the bids received in response to both the

regular tenders and recommended that the orders be placed on the lowest

bidder by counter offering the lowest rates, which were finalized in the

third emergency tender opened on 08.12.2011. These recommendations

were submitted to the Railway Board on 19.04.2012. However, before

thematter could be placed before the Competent Authority, the Tender

Committee recalled the matter from the Railway Board because the rates

quoted by the respondents in response to the fourth emergency tender,

which was opened on 21.05.2012, were lower in comparison to the rates

recommended for counter offer against the regular tenders opened on

01.10.2010 and 30.01.2012. The Tender Committee submitted the

revised recommendations to the Railway Board on 12.06.2012 for

approval of the Competent Authority. However,the Railway Board once

again returned the matter to the Tender Committee on 23.07.2012 with

certain observations.

11. After fourth reference backby the Railway Board, the appellant sent

letter dated 17.08.2012 to the respondentsto provide details like cost

break-up, percentage of imported components and proforma invoice of

imported components for Item Nos.1 and 2 for the regular tenders opened

on 01.10.2010 and30.01.2012. The respondents did not comply with the

direction of the Tender Committee. Notwithstanding this, further

negotiations were held for determination of price in respect of the regular

tenders.Both the respondents agreed to reduce the price to the level of

rates finalized against the 5themergency tender (EP5), which was opened
 6

on 28.08.2012, but made it clear that the Price Variation Clause (PVC)

will not be applicable qua them and the rates would remain firm.

12. The rates quoted by the respondents in EP1 and EP2 were identical

and orders were placed on both the respondents in equal quantity in

respect of both the items. In EP3, the price quoted by both the

respondent were identical, but an alternative offer made by Respondent

No.1 in respect of ItemNo.1 was with lower price. Therefore, the Tender

Committee recommended for placing of order on respondent No.1 for 60%

of the tender quantity and 40% on Respondent No.2 in respect of Item

No.1. For Item No.2, the rates quoted by both the respondents were

identical and the Tender Committee recommended placing of orders in

equal ratio. In response to EP4, the respondents quoted different rates

for both the items. Subsequently, Respondent No. 1, whose rates were

higher, agreed to reduce the same at par with Respondent No. 2.

Thereafter, orders were placed on both the respondents. In EP5, it was

specifically mentioned that the respondents should submit the detailed

cost break-up, country or origin of import and the OEM along with proof

regarding the imported contents of the equipments. The respondents did

not provide the required information but abandoned the PVC in their

offers. In the negotiations held by the Tender Committee, the rate was

reduced by 5.87% (approximately) in respect of Item No. 1 and 5.14%

(approximately) in respect of Item No. 2. As a sequel to this, the

respondents agreed to reduce the price quoted in the regular tenders at

par with the price of EP5 with the condition that PVC will not be

applicable to their offers.

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13. After two years of the opening of EP5, the appellant made a

reference under Section 19(1)(b) of the Act with the allegation that the

respondents have operated like a cartel and shared the quantity for

supply of AMDBS. According to the appellant, the respondents took

advantage of the limited competition in the market for supply of AMDBS

and refused to provide cost break-up and proper justification for the rates

quoted by them, which shows that their conduct was anti-competitive.

14. The Commission considered the allegations made by the appellant

and felt prima facie satisfied that the same require investigation.

Accordingly, order dated 29.11.2013 was passed under Section 26(1) of

the Act.

15. The Joint Director General (Jt. DG), to whom the case was

entrusted, issued notices dated 02.05.2014 to the respondents under

Section 36(2) read with Section 41(2) of the Act and called upon them to

furnish the specified information and documents. Respondent No. 1 filed

reply dated 02.06.2014 and Respondent No. 2 did so on 04.06.2014. The

Jt. DG alsosummoned the officials of the Rail Coach Factory, Kapurthala

and the representatives of Respondents Nos. 1 and 2 to clarify their

respective positions.All of them complied with the directives given by the

Jt. DG.

16. After completing the investigation, the Jt. DG submitted report

dated 27.02.2015. He took cognizance of the statements made on behalf

of the appellant and Respondents Nos. 1 and 2, referred to the terms and

conditions embodied in the tenders issued by the Railways for

procurement of AMDBS, the criteria of eligibility, the rates quoted by the

respondents in the regular as well as emergency tenders and concluded

 8

that the respondents have formed cartel and acted in violation of Section

3(3)(d) read with Section 3(1) of the Act. The summary of findings and

conclusion recorded by the Jt. DG are contained in paragraphs 7.19 and

7.20 of the report, which are reproduced below :

“7.19 Summary of findings

1. Both the parties submitted identical rates in three

successive Emergency tenders of RCFK in the year

2011 for the Axle mounted brake System for LHB

Coaches and Power Car.

2. OP1 failed to substantiate the claim the RCFK

official(s) had asked OP1 to quote the particular

rates in EP1.

3. As per the clause 3.1 of the special conditions of

Railway contracts, the Railways were under

obligation to place supply order of entire quantity

on one party to the exclusion of others, in the

event of equal rates. Therefore, there was no

reason for Railways to suggest the OPs to quote

equal rates in tenders.

4. OP1 has failed to substantiate as to how the

identical rates of both OPs helped in early

finalization of EPs as in the event of different rates

in Eps the routine process of ascertaining of

reasonableness of rates and counter offer to L2

could have been in any case expedited by RCFK.

 9

5. The contention of OP1 that the stock position of

RCFK was critical is not tenable, as the very

purpose of emergency purchases was to meet the

urgent requirement of RCFK.

6. OP2 could not explain as to why it decided toque

the already disclosed price in consecutive tender

when it could exercise an element of surprise

instead of quoting last negotiated rates of Regular

Tender 1 in EP1.

7. After opening of EP1 when OP2 found that the

rates quoted by OP1 were exactly the same for

both items, OP2 did not raise this matter with IP.

The justification of OP2 that it quoted last

negotiated rates of Regular Tender 1 in EP 1 as

these rates were their own rates, has no

substance as OP2 could not explain as to why it

did not claim the supply order for entire quantity

in EP1 citing the relevant condition in the tender.

8. The rates of both items in EP2 were also identical.

Both OPs have stated that due to little gap

between EP1 and EP2 they had no option to quote

alternate rates. The conduct of both Parties defies

economic rationale as normally, the competition

firms would have tried to reduce rates even

marginally to win at least 60% quantity rather

than settling for 50%. Thus, identical rates in

 10

EP2 could not have been possible without tacit

understanding between both OPs.

9. OPs have failed to explain as to how the rates of

both parties in EP3 were identical. The argument

that parties quoted LPR (last purchase rate) has

no merit as despite sufficient margins, LPR has

not been followed consistently. Even otherwise

parities in normal circumstances try to win the

tender by quoting slightly below LPR. Thus, the

behaviour of both OPs did not reflect rationale of

competing firms.

10. The justification of OPs that the rates of EP1, EP2

and EP3 were ‘provisional’ and subject to outcome

of regular tender 1 and therefore the identical

quote were inconsequential has no substance as

both OPs instead of quoting lower rates to get

more quantity of supply (at least 60% which is

one and half time more than L2) conveniently

shared the tender quantity in the ratio of 50:50.

11. The contention of OP2 that tender exercise of

Railways is an ‘empty formality’ due to quantity

distribution, negotiations and counter offer, is

untenable. It may be noted that bid rigging is

possible by quoting pre-determined rates so that

even after negotiations there is substantial margin

for colluding parties. Thus, firms cannot take

 11

shelter under tender conditions to justify

concerted behaviour.

12. The economic analysis of cost of production does

not justify identical rates in three successive

tenders.

13. Comprehensive analysis of bidding pattern of both

OPs from 2005 to 2013 indicate collusion viz. bid

repetition, identical installation costs, difference of

less than 1% in the quotes, simultaneous increase

and decrease, simultaneous removal of PVC,

refusal to submit Cost data to RCFK.

14. The analysis of prices quoted by OPs indicates

their intention to keep the price at a pre-

determined level and to share the quantity of

supply in the ratio of 50:50.

15. Presence of factors considered conducive for

collusive behaviour in the present case

corroborates the finding that both OPs have

indulged in collusive bidding.

16. The conduct of the OPs indicates high probability

of collusion in the emergency tenders of 2011.

7.20 Investigation, therefore, concludes that OP1 and OP2

indulged in bid rigging by quoting identical rates and

sharing quantity in half in three successive emergency

tenders in the year 2011 floated by RCFK. On the basis

 12

data and evidences gathered by Investigation it is

proved that OP1 and OP2 indulged in bid rigging. The

conduct of OP1 and OP2 contravenes section 3(3)(d)

read with section 3(1) of the Act.

17. In paragraph 8 of his report, the DG adversely commented upon the

policies being followed by the Railways for procurement of various

products and gave certain suggestions for improvement.

18. The Commission considered the report of the DG and directed that

copies thereof be supplied to the parties to enable them to file objections/

suggestions.Both the respondents filed detailed objections to contest the

finding recorded by the Jt. DG on the issue of cartel formation and bid

rigging.

19. After examining the records which included the findings recorded

by the Jt. DG and objections raised by the respondents, the Commission

held that similarity of price at which two items of AMDBS were offered by

the respondents cannot lead to an inference that they had formed a cartel

or indulged in collusive bidding.

20. We have heard learned counsel for the appellant and perused the

record. In paragraphs 2 and 3 of the application for condonation of delay,

the appellant has averred as under :

“2. That the impugned order was passed on 08.09.2015

and a certified copy was signed by the Ld. Assistant

Registrar of Competition Commission of India on

11.09.2015. The certified copy of the impugned order

was received in the office of the Appellant on

 13

16.09.2015 as is clear from the noting on the first page

of the impugned order on page 15 of the paper book.

The Appeal was filed before this Hon’ble Tribunal on

Monday i.e. 16.11.2015, since the previous two days

were Saturday and Sunday. The Appeal thus was filed

well within the time. The Registry of this Hon’ble

Tribunal however, has raised the objection that there is

a delay of 6 days in filing the Appeal.

3. That though there is no delay in filing the Appeal but to

avoid any controversy and objection from the Registry

and to get the Appeal listed, the present application is

being moved.

21. In our opinion, the cause shown by the appellant for delayed filing

of appeal is sufficient. Therefore, I.A. No. 29/2016 is allowed and delay

in filing the appeal is condoned.

22. Before adverting to the merits of the case, we deem it necessary to

mention that the appeal suffers from a fatal defect of non-impleadment of

the Commission as a party respondent. Undisputedly, the appeal is

directed against the order passed by the Commission. The latter is

entitled to contest the appeal and for that purpose, it can authorise any

of the persons enumerated in Section 53-S(3) of the Act. The judgement

of the Supreme Court in Competition Commission of India Vs. Steel

Authority of India Limited [(2010) 10 SCC 744] also shows that the

Commission is a necessary party in an appeal filed under Section 53-B.

Therefore, its non-impleadment is fatal to the maintainability of the

appeal.
 14

23. Notwithstanding the above fatal defect in the constitution of the

appeal, we have carefully scrutinised the record and considered the

arguments of the learned counsel for the appellant for determining

whether the Jt. DG was legally justified in recording a finding that the

respondents had formed a cartel and indulged in bid-rigging in violation

of Section 3(3)(d) read with Section 3(1) of the Act simply because they

had quoted identical price in response to the regular as well as emergency

tenders and whether the Commission rightly held that the evidence

collected by the Jt. DG was not sufficient for drawing an inference that

the respondents had formed a cartel or indulged in bid rigging.

24. The question whether identical price quoted by the bidders can be

made the sole basis for recording an affirmative finding on the issue of

cartel formation was considered by the Supreme Court in Union of India

Vs. Hindustan Development Corporation and others, which has been

reported in two parts of the Supreme Court Cases. The first part which

contains the facts of that case and conclusions recorded by the Supreme

Court is reported in (1993) 1 SCC 467. The second part which contains

detailed reasons in support of various conclusions is reported in (1993) 3

SCC 499.

The factual matrix of that case is substantially similar to the case in

hand. Every year, the Railway Board used to invite bids for supply of cast

steel bogies which were used for building the wagons. There were 12

suppliers, who were regularly supplying the cast steel bogies. Two new

entrants were Simplex and Beekay. Among the 12 regular suppliers,

M/s. H.D.C., Mukand and Bhartiya were having capacity to manufacture

large quantities of steel bogies.

 15

In response to a limited tender notice issued by the Railway Board

on 25.10.1991 for procurement of 19,000 cast steel bogies, M/s. H.D.C.,

Mukand and Bhartiya quoted identical price of Rs. 77,666/- per bogie,

the other tenderers quoted price between Rs. 83,000/- and Rs. 84,500/-

per bogie. The Tender Committee considered all the tenders and

concluded that M/s. H.D.C., Mukand and Bhartiya, who had quoted

identical rates without any cushion for escalation between July 1, 1991

and September 1, 1991, had apparently formed a cartel but ultimately

recommended award of contract to them for supply of bogies @ Rs.

76,000/- per bogie. The day on which the Tender Committee finalised the

recommendations, Member (Mechanical), who was a part of the Tender

Committee received letters from M/s. H.D.C. and Mukand that they could

supply bogies at a reduced rate. Advisor (Finance), Member (Mechanical),

Financial Commissioner and Minister for Railways recorded their

independent views. They, by and large, agreed with the view of the

Tender Committee that the three suppliers had formed a cartel. However,

all of them, except the Minister for Railways, suggested that the

recommendations of the Tender Committee may be accepted else the

public interest would suffer. The Minister accepted the recommendations

subject to reduction in the quantum of bogies for which contracts were to

be awarded to three bidders. The Authorities also decided that the price

should be reduced and a counter offer be given to the three bidders to

supply bogies @ Rs. 65,000/- per bogie and to nine other manufacturers

to supply bogies @ Rs. 76,000/- per bogie.

M/s. H.D.C. and Mukand filed writ petitions in the Delhi High

Court to challenge the counter offer. The High Court passed the interim

order and directed the Railways to accept the allocation of bogies

 16

recommended by the Tender Committee and pay the price @ Rs. 67,000/-

per bogie subject to the final decision. In the Special Leave Petition filed

against the order of the High Court, the Supreme Court modified the

interlocutory order.

At the final hearing, learned counsel for Union of India reiterated

the views of the Tender Committee, three senior officers and the Minister

that M/s. H.D.C., Mukand and Bhartiya had formed a cartel and argued

that it was not obligatory for Railways to place order for supply of bogies

at the rate quoted by them. He also justified the allotment of bogies to

other manufacturers by contending that this was in consonance with

Article 14 of the Constitution of India. The counsel appearing for M/s.

H.D.C., Mukand and Bhartiya controverted the Railways’ assertions on

the issue of cartelisation by arguing that mere quoting of identical price

cannot justify such an inference.

By an order dated 14.01.1993, the Supreme Court disposed of the

Special Leave Petition by recording its conclusions, paragraphs 1 and 6 of

which read as under :

“1. There is not enough material to conclude that M/s

H.D.C., Mukand and Bhartiya formed a cartel. Because of

mere quoting identical tender offers by the said three

manufacturers for which there is some basis, the conclusion

that the said manufacturers had formed a cartel does not

appear to be correct. However since the offers of the said

three tenders were identical and the price was somewhat

lower, the Tender Committee entertained a suspicion that a

cartel had been formed and the same got further strengthened
 17

by the post-tender attitude of the said manufacturers which

further resulted in entertaining the same suspicion by the

other authorities in the hierarchy of the decision making body

including the Minister of Railways. Though there is not

enough of material to establish formation of a cartel as is

understood in the legal parlance but at the same time it

cannot be contended that such an opinion entertained by the

concerned authorities including the Minister was per se

malicious or was actuated by any extraneous considerations.

After a careful examination of the entire record and facts and

circumstances of the case we are of view that all the railway

authorities including the Minister acted in a bona fide manner

in taking the stand that the three manufactures formed a

cartel.

6. Now coming to the allotment of quota of bogies the

Tender Committee made recommendations on the basis of the

existing practice. The Minister of Railways in his ultimate

decision has made some variations taking into consideration

tile recommendations of the Financial Commissioner and

other authorities. He has however not accepted these

recommendations fully. In making these variations, the

Minister accepting ultimately reduced the allotment of quota

to the said three tenderers substantially by way of reprisal. In

view of our finding that the formation of an opinion that cartel

was formed had no firm factual foundation; such a reduction

of quota by way of reprisal cannot be justified. We are,

however, not inclined to accept the contention made on behalf

 18

of M/s H.D.C., Mukand and Bhartiya that no departure from

the recommendations of the Tender committee is permissible

in the absence of any established policy which was also

known by the tenderers. From the records it appears that in

the past also there have been such variations. In our view, the

Minister of Railways as the final authority, after considering

various relevant factors, may be justified in taking a

particular decision in the matter of allotment of quota but

such decision must be taken on objective basis. But, in this

case. It appears to us that all the smaller manufacturers

deserving a favourable treatment in the matter of allotment of

quota, have not been equally treated in the sense that one or,

two of them got larger quantities. Though this does not

appear to be a serious departure, yet in these matters the

Government is expected to be just and fair to one and all. We

hope that in future the authorities would make a proper

consideration of the relevant factors in respect of each

tenderer in an objective manner in allotting the quantities.”

[Emphasis supplied]

The reasons in support of the aforesaid conclusions were recorded

on various aspects of the case including the powers of the State and its

agencies in the matter of award of contract. In paragraph 14 of the

judgment reported in (1993) 3 SCC 499, the Supreme Court considered

the submissions on the issue of formation of cartel by three big

manufacturers, referred to the dictionary meanings of the word ‘cartel’,

took notice of the discussion on cartel in American Jurisprudence 2d Vol.

 19

54, referred to some decisions of the foreign jurisdictions and observed

that the opinion formed by the Tender Committee that the three big

manufacturers had formed a cartel because they had quoted identical

price was not correct. The relevant portions of that judgement are

extracted below :

“14. First we shall consider the submissions regarding the

formation of cartel by these three big manufacturers. The

word “cartel” has a particular meaning with reference to

monopolistic control of the market. In Collins English

Dictionary, the meaning of the word “cartel” is given as under:

“cartel — 1. Also called: trust, a collusive international

association of independent enterprises formed to

monopolize production and distribution of a product or

service, control prices etc ….”

In Webster Comprehensive Dictionary, International Edition,

the meaning of the word “cartel” is given thus:

“cartel … 3. An international combination of

independent enterprises in the same branch of

production, aiming at a monopolistic control of the

market by means of weakening or eliminating

competition ….”

In Chambers' English Dictionary the word “cartel” is defined

thus:

“cartel — A combination of firms for certain purposes

especially to keep up prices and kill competition ….”

 20

In Black's Law Dictionary, Fifth Edition the meaning of the

word “cartel” is given thus:

“cartel— A combination of producers of any product

joined together to control its production, sale, and price,

and to obtain a monopoly in any particular industry or

commodity …. Also, an association by agreement of

companies or sections of companies having common

interests, designed to prevent extreme or unfair

competition and allocate markets, and to promote the

interchange of knowledge resulting from scientific and

technical research, exchange of patent rights, and

standardization of products.”

In American Jurisprudence 2d Vol. 54, page 677 it is

mentioned thus:

“A cartel is an association by agreement of

companies or sections of companies having

common interests, designed to prevent extreme or

unfair competition and to allocate markets, and

perhaps also to exchange scientific or technical

knowledge or patent rights and to standardize

products, with competition regulated but not

eliminated by substituting competition in quality,

efficiency, and service for price-cutting. An

international cartel arrangement providing for a

worldwide division of a market has been held a

per se violation of 15 USC S 1. An American

 21

corporation violates the Sherman Act by entering

into agreements with English and French

companies to (1) allocate world trade territories

among themselves; (2) fix prices on products of

one sold in the territory of the others; (3)

cooperate to protect each other's markets and

eliminate outside competition; and (4) participate

in cartels to restrict imports to and exports from

the United States.”

In A Dictionary of Modern Legal Usage by Bryan A.

Garner, it is noted thus:

“cartelize - to organize into a cartel. See -IZE.

Yet cartel has three quite different meaning: (1)

‘an agreement between hostile nations’; (2) ‘an

anticompetitive combination usu. that fixes

commercial prices’; and (3) ‘a combination of

political groups that work toward common goals’.

Modern usage favours sense (2).”

The cartel therefore is an association of producers who by

agreement among themselves attempt to control production,

sale and prices of the product to obtain a monopoly in any

particular industry or commodity. Analysing the object of

formation of a cartel in other words, it amounts to an unfair

trade practice which is not in the public interest. The

intention to acquire monopoly power can be spelt out from

formation of such a cartel by some of the producers. However,

 22

the determination whether such agreement unreasonably

restrains the trade depends on the nature of the agreement

and on the surrounding circumstances that give rise to an

inference that the parties intended to restrain the trade and

monopolise the same. Dealing with the provisions of Sherman

Anti-Trust Act, in National Electrical Contractors

Associations, Inc. v. National Constructors Association. [678

FR 2d 492] it was observed as under:

“We know of no better statement of the rule than that of

this court in United States v. Society of Ind. Gasoline

Marketers [624 F 2d 461 : 465 (4th Cir 1979) : cert

denied 101 S Ct 859 : 449 US 1078 : 66 L Ed 2d 801]

where stated: ‘Since in a price-fixing conspiracy the

conduct is illegal per se, further inquiry on the issues of

intent or the anti-competitive effect is not required. The

mere existence of a price-fixing agreement establishes

the defendants’ illegal purpose since the aim and result

of every price-fixing agreement, if effective, is the

elimination of one form of competition'.”

It was also observed that:

“The critical analysis in determining whether a

particular activity constitutes a per se violation is

whether the activity on its face seems to be such that it

would always or almost always restrict competition and

decrease output instead of being designed to increase

 23

economic efficiency and make the market more rather

than less competitive.”

Matsushita Electric Industrial Co., Ltd. v. Zenith Radio

Corpn. [9 L Ed 2d 538] is a case where American

manufacturers of consumer electronic products brought suit

against a group of their Japanese competitors in the United

States District Court alleging that these competitors had

violated Sections 1 and 2 of the Sherman Act and other

federal statutes. It was alleged that the Japanese companies

had conspired since 1950 to drive domestic firms from the

American market, by maintaining artificially high prices for

these products in Japan while selling them at a loss in the

United States. The District Court after excluding bulk of

evidence, finally granted the Japanese companies' motion for

summary judgment dismissing the claims. The United States

Court of Appeal reversed and remanded for further

proceedings. On a certiorari, the United States Supreme

Court while considering the standards supplied by the Court

of Appeals in evaluating the summary judgment, observed

thus:

“To survive petitioners' motion for summary judgment,

respondents must establish that there is a genuine

issue of material (475 US 586) fact as to whether

petitioners entered into an illegal conspiracy that

caused respondents to suffer a cognizable injury.”

It was further observed that:

 24

“A predatory pricing conspiracy is by nature speculative.

Any agreement to price below the competitive level

requires the conspirators to forgo profits that free

competition would offer them. The forgone profits may

be considered an investment in the future. For the

investment to be rational (475 US 589) the conspirators

must have a reasonable expectation of recovering, in the

form of later monopoly profits, more than the losses

suffered.

* * *

The alleged conspiracy's failure to achieve its ends in

the two decades of its asserted operation is strong

evidence that the conspiracy does not in fact exist.

Since the losses in such a conspiracy accrue before the

gains, they must be ‘repaid’ with interest. And because

the alleged losses have accrued over the course of two

decades, the conspirators could well require a

correspondingly long time to recoup. Maintaining

supracompetitive prices in turn depends on the

continued cooperation of the conspirators, on the

inability of other would-be competitors to enter the

market, and (not incidentally) on the conspirators' ability

to escape antitrust liability for their minimum price-fixing

cartel. Each of these factors weighs more heavily as the

time needed to recoup losses grows. If the losses have

been substantial — as would likely be necessary (475

 25

US 593) in order to drive out the competition —

petitioners would most likely have to sustain their cartel

for years simply to break even.”

(emphasis supplied)

In this context, one of the submissions is that the price

of Rs 67,000 offered by these manufacturers during the post-

tender stage was not predatory and that the view taken by the

authorities that such an offer of lower price was predatory one

confirming the formation of a cartel, is also unwarranted.

In Matsushita case [678 FR 2d 492] it was observed that

predatory pricing conspiracies are by nature speculative and

that the agreement to price below the competition level

requires the conspirators to forgo profits that free competition

would offer them. It was also held therein as under:

“To survive a motion for a summary judgment, a

plaintiff seeking damages for a violation of Section 1 of

the Sherman Act must present evidence ‘that tends to

exclude the possibility’ that the alleged conspirators

acted independently. Thus, respondents here must

show that the inference of a conspiracy is reasonable in

light of the competing inferences of independent action

or collusive action that could not have harmed

respondents.”

Therefore mere offering of a lower price by itself, though

appears to be predatory, cannot be a factor for inferring

 26

formation of a cartel unless an agreement amounting to

conspiracy is also proved.

(emphasis supplied)

A mere offer of a lower price by itself does not manifest

the requisite intent to gain monopoly and in the absence of a

specific agreement by way of a concerted action suggesting

conspiracy, the formation of a cartel among the producers

who offered such lower price cannot readily be inferred…..

……… In the instant case, initially the Tender

Committee formed the opinion that the three big

manufacturers formed a cartel on the ground that the price

initially quoted by them was identical and was only a cartel

price. This, in our view, was only a suspicion which of course

got strengthened by post-tender attitude of the said

manufacturers who quoted a much lesser price. As noticed

above it cannot positively be concluded on the basis of these

two circumstances alone. In the past these three big

manufacturers also offered their own quotations and they

were allotted quantities on the basis of the existing practice.

However a mere quotation of identical price and an offer of

further reduction by themselves would not entitle them

automatically to comer the entire market by way of monopoly

since the final allotment of quantities vested in the authorities

who in their discretion can distribute the same to all the

manufacturers including these three big manufacturers on

certain basis. No doubt there was an apprehension that if

 27

such predatory price has to be accepted the smaller

manufacturers will not be in a position to compete and may

result in elimination of free competition. But there again the

authorities reserved a right to reject such lower price. Under

these circumstances though the attitude of these three big

manufacturers gave rise to a suspicion that they formed a

cartel but there is not enough of material to conclude that in

fact there was such formation of a cartel……”

25. An issue substantially similar to the one raised in this appeal was

also considered in Appeal Nos.13, 15 and 20 of 2014 decided by the

Tribunal on 18.12.2015. In that case, the DG and the Commission

concurrently found that the appellants had formed cartel and indulged in

bid rigging in the matter of supply of C2N feed valves to Diesel Loco

Modernization Works, Patiala. In support of this conclusion, the DG and

the Commission relied upon plus factors, as is evident from paragraphs

19 and 20 of the Tribunal’s order, which are extracted below:

“19. In this case, the DG recorded an affirmative

conclusion on the issue of cartel formation and bid-rigging

by the appellants by relying upon the following factors:

(a) RDSO had approved only three suppliers i.e. the

appellants and there was no new entrants in the

field over a period of time and that gave scope for

cartel formation.
 28

(b) Three approved suppliers have given bids from time

to time in response to the tenders issued by different

Zonal Railways quoting identical price.

(c) The demand of feed-valves has remained almost

static in last few years and the existing operators

have prevented new entrants from entering the

market.

(d) The system of awarding contracts by the Railways is

conducive to collusive bidding.

(e) The product specifications approved by RDSO

makes cartelisation very probable.

(f) When the products or services sold or rendered are

identical or very similar and there are few or no

substitutes, it is easier for the bidders to reach an

agreement on a common price structure and

probability of the appellants reaching an agreement

on a common price is very high.

(g) Respondent No. 2, who complained of cartel

formation, had placed order on FTRTIL to supply 34

more feed-valves @ Rs. 12,855.47 in addition to the

purchase order dated 11.11.2011 and, at the same

time, had entered into negotiation with SIL and

ultimately placed order for 67 feed-valves @ Rs.

16499.99. This was indicative of faulty procurement

system adopted by the Railways resulting in

financial loss.
 29

(h) The three bidders had quoted identical price by

manipulating the figures in as much as EL,

Faridabad quoted base price of Rs. 17147.54. The

other two bidders quoted Rs. 14534.52 (FTRTIL,

Hosur) and Rs.14,674.28 (SIL, Kolkata) as base

price and added the elements of Excise Duty, Cess

on Excise Duty and Central Sales Tax to make the

final price as Rs.17,147.54.

(i) The assertion of the appellants that their price was

based on the price quoted in previous purchase

orders was not correct.

20. The Commission approved the findings and

conclusions recorded by the DG primarily on the basis of

identical price quoted by the appellants by observing that

this could not have been possible because their

production units are situated in three different states.

The Commission also relied upon the factum of award of

contracts to the appellants by different Zonal Railways

despite the fact that the price offered by them was

identical in several cases and held that they are guilty of

cartelisation. The observation made by the Commission

that the appellants had adopted a strategy which involved

supplementary/complementary bidding by EL and FTRTIL

is based on pure conjectures and is liable to be rejected

because before making this observation, the Commission

did not give any opportunity to the two appellants to have

 30

their say. Similarly, the observation made by the

Commission that the Tender Committee committed an

illegality in overlooking the bids of EL and FTRTIL is ex

facie erroneous. Once the competent authority had laid

down particular conditions required to be fulfilled by the

tenderer and the two of the three tenderers failed to

comply with the same, the Tender Committee and

Respondent No. 2 cannot be said to have committed any

illegality by not acting upon their tenders. The Tender

Committee could have recommended for fresh tendering

and Respondent No. 2 could have accepted that

recommendation but their failure to do so cannot lead to

an inference that they have acted with ulterior motive or

that the Tender Committee ought to have waived the

defects/deficiencies and allowed the two appellants i.e. EL

and FTRTIL to participate in the bid or called them for

negotiations.”

26. This Tribunal took cognizance of the so-called plus factors relied

upon by the DG and the Commission as also the statement of the

supplies made by the three appellants between January, 2009 to April,

2014 and observed:

“22. A careful scrutiny of the above statement shows that

between January, 2009 and February, 2012, various

Zonal Railways had issued 44 tenders. Of them exactly

identical price was found only in one tender dated

15.12.2011 issued by West Central Railway, where the

 31

price quoted by the bidders was Rs. 16,833.16. Out of

the remaining bids, similar price was quoted by SIL and

FTRTIL in response to tenders dated 20.07.2009 issued by

Southern Railway, 24.09.2010 issued by Southern

Railway and 08.11.2011 issued by N F Railway. It is thus

clear that only in two to three percent of the total tenders

invited by various Zonal Railways, the price quoted by the

appellants or two of them were identical. The variation in

the quantum of price quoted by the appellants is also

evident from the statement furnished by the learned

counsel for Respondent No. 2. Therefore, it must be held

that both the DG and the Commission committed grave

error by relying upon the so-called past conduct of the

appellants in quoting identical price as a plus-factor for

arriving at a conclusion that they had formed a cartel.

23. The calculation made by the DG and the

Commission on the price formula indicated in the offer of

SIL is also erroneous because the DG proceeded on an

erroneous assumption that the rate of Central Sales Tax

was 5% whereas, in fact, it was 4%. The DG and the

Commission also committed an error in presuming that

the appellants had quoted high price to maximize the

profit, ignoring that the rate of Excise Duty had been

increased by the Government.

24. On the basis of the above discussion, I hold that the

findings and conclusions recorded by the DG and the

 32

Commission that the appellants are guilty of cartel

formation and bid-rigging are legally unsustainable.”

27. In the present case, the Commission extensively referred to the

analysis of the facts and evidence made by the Jt. DG, the objections filed

by the respondents and held that the evidence relied upon by the Jt. DG

is not sufficient to hold that the respondents had acted in contravention

of the provisions of the Act. The reasons recorded by the Commission for

arriving at this conclusion are contained in paragraphs 5.1 to 5.21 of the

impugned order, which are reproduced below :

“5.1 The Commission has perused the material available on

record and heard the Informant and the counsels on

behalf of OPs. On careful consideration of the matter,

the Commission is of the opinion that in order to arrive

at a decision, the following issues needs to be

determined:

Issue 1 : Whether OPs have colluded to fix the prices and rig

bids in EP1, EP2 and EP3 floated by the Informant in

contravention of the provisions of section 3(1) read with

section 3(3)(d) of the Act?

5.2 The Commission has noted the fact that OPs had

submitted identical/ similar price bids in response to

the Eps 1, 2 and 3 floated and opened by the Informant

on 13.06.2011, 24.08.2011 and 08.12.2011,

respectively. Needless to mention that AMDBS is a vital

braking equipment used in LHB Design AC/Non-AC

 33

coaches and Power Cars, procured by Indian railways

and the Informant by way of open tenders. Only two

firms, i.e., OP1 and OP 2 are RDSO approved vendors/

manufacturers which have the expertise and technology

to manufacture both types of AMDBS, i.e., Item 1 and

Item 2. In EP1, floated for three months requirement

and opened on 13.06.2011, OP 2 quoted the price

negotiated for Regular Tender 1 and OP 1 quoted a

higher price for both the items. However, on

13.06.2011, i.e., on last day of submission of EP1, OP 1

withdrew its initial bid and quoted the same price which

was quoted by OP 2.

5.3 Thus, both OP 1 and OP 2 quoted the same prices for

both the items and the Informant placed orders for 50%

quantity each on both OPs. Further in EP2, both the

OPs quoted the same price for both the above said items

which was the price agreed between the Informant and

OP 2 after negotiations in Regular Tender 1. Again, the

informant placed orders for 50% quantity each on both

the items. Another emergency purchase tender i.e. EP3

for three months requirement was opened on

08.12.2011. In EP3, OP 1 quoted a price of

Rs.21,64,111.74 for Item 1 but also made an alternate

offer of Rs.21,35,730.24 on account of indigenisation.

The Tender Committee found the alternate offer made

by OP 1 in EP3 to be technically suitable and

recommended for dividing quantity as 60:40 on OP 1

 34

and OP 2 for Item 1. For Item 2, the rates offered by

OPs were same and the Tender Committee

recommended placing 50% quantity on them.

5.4 Based on the above facts, the Informant had alleged

that OPs colluded between themselves for three

consecutive emergency tenders i.e., EP1, EP2 and EP3

for purchase of items in the year 2011. The

Commission has no doubt that OPs quoted identical

price for Item 2 in EP1, EP2 and EP 3 and for Item 1 in

EP1 and EP2. The limited question which requires

determination by the Commission is as to whether the

identical pricing in the three emergency tenders is

because of collusion between OPs or not.

5.5 The Informant has alleged that OPs formed a cartel and

shared the quantity for supply of AMDBS, taking

advantage of the limited competition as well as the fact

that railway coaches cannot be manufactured without

the brake system.

5.6 However, OPs contention is that the Informant required

them to provide details like cost break-up, percentage of

imported components and pro-forma invoice of imported

components for both the items i.e. Item 1 and Item 2 for

the regular tenders which were opened on 01.10.2010

and 30.01.2012. Since these details were not provided

by the OPs, the Informant allegedly filed reference

before the Commission. The Informant has

 35

acknowledged that it asked OPs to submit the cost

details as to assess the reasonableness of rates quoted

by them in the regular tenders. OPs have alleged in

their submissions/ objections that the reason for this

reference is the refusal on part of OPs not to accede to

Informant’s demand for cost details.

5.7 The Commission also notes that despite the fact that

EP1, EP2 and EP3 were issued and opened by the

Informant during 2011 and that too in a quick

succession with a difference of only few months, the

Tender Committee of the Informant did not raise any

objection on identical prices quoted by OPs in EP1, EP2

and EP3. Rather the Informant went ahead to place

supply orders on them for equal quantities for both the

items in EP1, EP2 and EP3, except for Item 1 in EP3

wherein the orders were placed in a ratio of 60:40 on OP

1 and OP 2, respectively.

5.8 OPs have vehemently alleged that the Informant had

informally suggested to OP 1 to quote the price

negotiated between OP 2 and the Informant for regular

tender 1 so as to expedite the supply of EP1. Further,

they alleged that the policy of the Railways is not

conducive to competition.

5.9 In this regard it is imperative to take note of the

observations made by the DG with regard to the policies

 36

of the Railways for procurement of goods by way of open

tenders.

5.10 While investigating the alleged contravention in the

instant case, the DG also examined the policies of the

railways as OPs persistently argued that the

procurement policies of the Railways are responsible for

lack of competition between the suppliers. Even before

the Commission, OPs urged that the policy of the

Railways is such that there is very little incentive to

compete as OPs know that they will secure 50% of the

order + 10% . Interestingly, OPs have also urged that

the policy further ensures that the bidders do not

benefit even if they collude and pre-decide the price as

the prices in different tenders are subject to the

approval of the Tender Committee. Further, many a

time the bidders are constrained to refund the money

already received as the price for supplies made, if the

Indian Railways later on determine the price is being

lesser than the quoted price.

5.11 The DG noted that Railways, being the largest procurer

of equipment and services, ought to design its

procurement procedure to promote and sustain

competition and provide a level playing field for its

present and prospective suppliers. It is evident that the

issues highlighted by the DG in its investigation report

 37

regarding policies of the Railways create an environment

which is not conducive for competition.

“5.12 Though tenders are floated to ensure competitive

bidding, the bidding process does not assure L1 of the

full award. Since AMDBS is a critical component of

safety in high speed trains, Railways have the provision

of splitting the quantity of supply between L1 and L2

bidders to ensure uninterrupted supply. Thus, L2 is

also coaxed to supply a portion of the bulk requirement

at L1 rate (say about 40% of the tendered quantity if

price differential is upto 3%). In such circumstances,

when supply order is split, there is little incentive for

competition amongst the bidders, as L1 in any case

does not get the supply order for complete quantity

(100%). Similarly, the L2 firm anyway gets a substantial

portion of the order. In such a scenario the suppliers

are aware that they will not secure the entire order but

only half or at most 2/3rd of the order. As such, to

maximise their profits, the suppliers tend to quote

higher prices instead of competitive prices.

5.13 There is also a 'quantity variation clause' in railway

tenders according to which variation is allowed to the

extent of +/- 30% and this can be operated till the

completion of contractual delivery period which is

generally one year. OPs have alleged that this clause is

onerous and heavily loaded in favor of the Informant.

 38

From the submissions of OPs and the findings of the

DG, it has come out that the rates are quoted by a

supplier on the basis of tender quantity it can possibly

supply without incurring a loss. However, if the

Railways operate +30% option clause or -30% during

the fag end of delivery period, the supplier is penalized

for no fault. Hence, the suppliers tend to inflate the

quotes so as cater for the 'uncertainty' in quantity for

supply and, therefore, Indian Railways may not get

competitive rates.

5.14 Further, the investigation has revealed that the time

taken for negotiations in case of railway tenders

discourage competitive quotes. As per the CVC

guidelines, such negotiations should be resorted to only

in rare situations and that too with the lowest

technically qualified bidder. Since negotiation has

become a regular feature, it appears that the bidders

tend to quote inflated rates anticipating reduced rates

in negotiation process.

5.15 The Commission also notes that in spite of the in-built

mechanism against cartelization and collusion, the

Informant never used the available mechanism. Also,

the Tender Committee, as per the findings of the DG,

has not recorded any suspicion on identical bids by OP

1 and OP 2 in EP1, EP2 or EP3. As per the observations

recorded by the DG, the Tender Committee of the

 39

Informant found the rates quoted by OP 1 and OP 2 in

EP1 to be reasonable and recommended the rates as

well as to 'equally distribute the quantity in the ratio of

50:50'. Further, even in EP2, the Tender Committee of

the Informant found the rates quoted by OP 1 and OP 2

to be reasonable and recommended the rates as well as

to 'equally distribute the quantity in the ratio of 50:50'.

Yet again in EP3, the Tender Committee of the

Informant found the lower rate of Rs. 21,35,730.24

quoted by OP 1 for Item 1 reasonable and recommended

to split the orders in the ratio 60:40 for Item 1 and

50:50 for Item 2.

5.16 The DG also observed that, despite claiming to suffer

from lack of competition in its tender, some actions by

the Railways do not promote competition in the tenders.

The case of Escorts is an illustration. Escorts was given

a developmental order by the Informant and it supplied

2 sets of AMDBS to them in January 2014. The system

is under testing in Rajdhani train. Soon thereafter, the

specifications for the product were changed by RDSO.

Moreover, in the subsequent tender, it was required

that the bidder should have experience of supplying at

least 18 sets of the brake system which should have

been tried for at least 18 months in trains. Due to this

condition, Escorts could not bid for full quantity in

subsequent tenders. Thus, the tender conditions acted

as an entry barrier to new suppliers and resulted in

 40

reduced competition. The DG has also made an

observation that the Railways do not make endeavour to

find new sources in tenders where there are few

suppliers e.g. there are several countries like Japan, S.

Korea and China which are running similar trains and

there must be suppliers for the same items which the

railways procure from OP 1 and OP 2.

5.17 Further, the Commission notes that OPs have alleged

that the present reference has been filed by the

Informant as a retaliatory action against them as they

refused to submit the cost breakup of their products.

5.18 OPs have claimed that cost data is confidential and

supplying the data to the Informant could result in

commercial harm to them. Cost details are sensitive

commercial information internal to the manufacturer

and the same can be reasonably denied as there is an

inherent risk of disclosure of such cost details which

may lead to harm.

5.19 The Informant, vide its application/response dated

20.04.2015 intimated the Commission that the

observations of the DG with regard to policy of the

Railways has been referred to the Ministry of Railways

for further action. Besides that, the only request that

the Informant has made is with regard to sharing of cost

details of OPs so as to enable the Railways to arrive at

the reasonableness of the rates. It may be mentioned

 41

here that the Commission, as a market regulator, is

entrusted with the duty to regulate and promote

competition in the market and not for enabling parties

to seek cost information.

5.20 Be that as it may, the main issue in this case is whether

the identical pricing by OPs in EP1, EP2 and EP3 was

because of collusion or otherwise. After having perused

all the facts placed on record and the submissions made

by OPs, the Commission is of the view that the evidence

available on record is insufficient to hold OP 1 and OP 2

responsible for having colluded in EP1, EP2 and/or

EP3. The contention of OPs that the price quoted by OP

1 in EP1 for both items was done at the informal

suggestion of the Informant has not been countered by

the Informant convincingly.

5.21 OP 1 has submitted that since the purpose of

emergency tenders is to meet immediate intermediate

demands between regular tenders, the officials of the

Informant informally communicated to OP 1 to quote

the negotiated rate of Regular Tender 1 so that

unnecessary delay in negotiation can be avoided. It was

also contended that the Informant had informally

communicated that the rates would be subject to final

rates in regular tenders and therefore, the rates quoted

in EP1, EP2 and EP3 were a mere formality.”

 42

28. It is significant to note that the respondents are the only approved

supplier of Item Nos.1 and 2 of AMDBS and the attempts made by the

Railways to procure supply from other sources have failed. In paragraph

5.20 of the impugned order, the Commission has also noted that the

Respondent No.1 had quoted the price in EP1 at the suggestion of the

appellant and this was not controverted by the latter convincingly. In

para 5.16 of the impugned order, the Commission has referred to the

efforts made by the Railways to get the supply of AMDBS from Escorts,

which failed because even before the product supplied by Escorts could

be tested, the conditions of eligibility was changed and on that account

Escorts was no longer eligible. It is also important to note that due to

delayed finalization of the rates quoted in response to first regular tender,

the Tender Committee issued EP1, EP2 and EP3. In EP1 and EP2 both

the respondents quoted identical price. In EP3 there was substantial

similarity of the price, but the Tender Committee did not suspect any

cartelisation and decided to place orders with the respondents. A

comparative study of the rates quoted in EP4 and EP5 also show that the

same were not identical. The rates quoted in response to the regular

tenders, were also not identical. Therefore, the Commission was right in

concluding that the evidence collected by the Jt. DG is not sufficient to

return an affirmative finding on the issue of cartel formation.

29. We are in complete agreement with the reasons assigned by the

Commission for not approving the conclusion recorded by the Jt. DG on

the issue of cartel formation by the respondents and by applying the ratio

of the Supreme Court judgement in Union of India Vs. Hindustan

Development Corporation and others [(1993) 3 SCC 499] and order dated

18.12.2015 passed by the Tribunal in Appeal Nos.13, 15 and 20 of 2014,

 43

we hold that the Commission did not commit any illegality by refusing to

approve the findings recorded by the Jt. DG on the issue of formation of

cartel/bid-rigging by the respondents and violation of Section 3(3)(d) read

with Section 3(1) of the Act.

30. We may add that in an oligopolistic market like the one in question,

the identity of price quoted by the bidders is not an unusual feature. The

players in a limited market are aware of the price quoted by each other in

one or the other bid and it is a normal tendency to quote the same price

in response to the next tender. Therefore, identical price quoted by the

respondents for the items of AMDBS did not constitute sufficient evidence

of cartel formation and in the absence of other plus-factors, it is not

possible to record a finding that the respondents had acted in violation of

Section 3(3)(d) read with Section 3(1) of the Act.

31. In the result the appeal is dismissed.

[G.S. Singhvi]
Chairman

[Rajeev Kher]
Member

17th February, 2016