CCI asks Rlys to ensure competition among suppliers in tenders

Fair trade watchdog CCI has observed that procurement policy of the Railways, the largest procurer of equipment and services in the country, needs to be more attuned to competition law principles.
The regulator's observation came while rejecting a complaint of alleged unfair business practices made by the Rail Coach Factory in Kapurthala against two suppliers.
The allegations were made against Faiveley Transport India and Knorr Bremse India in a matter related to procurement of Axle Mounted Disc Brake System (AMDBS) that are used in Linke-HofmannBusch (LHB) design AC and non-AC coaches and power cars.
Passing the order, CCI said it is of the view that the policy of the Railways with regard to procurement of the two items "may be made more in harmony with competition law principles".

The items are AMDBS with two different specifications.
"It is quite apparent that the procurement policies of the Railways... Also contributed to the lack of competition between the suppliers in the present case," Competition Commission of India (CCI) said.

As per the complaint, it was alleged that Faiveley Transport India (opposite party 1) and Knorr Bremse India (opposite party 2) colluded and quoted identical prices in various tenders floated for supply of AMDBS required for the specified coaches and power cars.
A detailed probe by CCI's investigation arm -- Director General (DG) -- had found that the two companies took undue advantage of limited competition in the market and formed a cartel to share quantities procured through the tender.

However, the regulator did not fully accept the findings of the DG and decided to close the case.
"... The evidence relied upon by the DG to reach the findings in the present case are not sufficient to hold the opposite parties in contravention of the provisions of the (Competition) Act," CCI said in its order dated September 8.
According to the watchdog, the main issue in this case is whether the identical pricing by the opposite parties in Emergency Purchase Tender (EP1), EP2 an EP3 was because of collusion or otherwise.
"After having perused all the facts placed on record and the submissions made by the opposite parties, 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 emergency tenders EP1, EP2 and/or EP3.

"The contention of the opposite parties 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," the order said.
The informant or complainant is Deputy Chief Materials Manager, Rail Coach Factory, Kapurthala.