CCI fines United Phosphorus, 2 others Rs 317 cr

Charges firms with collusive bidding to supply aluminium phosphide tablets to Food Corporation of India

The Competition Commission of India has imposed Rs 317 crore in penalties on three companies, including agro-chemicals major United Phosphorus, for collusive bidding to supply ALP tablets to Food Corporation of India (FCI).

The aluminium phosphide (ALP) tablet manufacturers -- United Phosphorus, Excel Crop Care, and Sandhya Organics -- have been fined 9% of the their three-year average profit.

ALP tablets are used by the FCI for preserving its central pool of foodgrains.

United Phosphorus has been asked to pay up Rs 252.44 crore, Excel Crop, Rs 63.90 crore and Sandhya Organics Chemicals, Rs 1.57 crore.

In its order, the Competition Commission of India (CCI) said it has found companies entering into anti-competitive agreement and that their "acting together and quoting identical prices has deprived FCI of competitive bid rates in manner of procuring ALP tablets".

The Commission also directed the companies to 'cease and desist' from engaging in practices of manipulating process of bidding in any manner.

CCI had investigated the matter after receiving reference from FCI which alleged that such cartel among manufacturers was leading to rise in cost of procurement.

FCI had also alleged that since the companies were "quoting identical rates under an anti-competitive agreement or understanding, the very purpose of floating tenders was defeated."

It also said that as a result of the anti-competitive agreement of the ALP manufacturers, the price of the tablets has nearly doubled during 2007 to 2009.

Meanwhile, shares of United Phosphorus was trading at Rs 120.50, down 5.53% in the afternoon session on the BSE.