CCI slaps Rs 3 cr fine on 12 suppliers to ordnance factories

The Competition Commission has imposed a Rs 3 crore penalty on 12 suppliers for indulging in cartelisation for supplying raw material that is used for manufacturing of 81 mm bomb.
Apart from slapping penalty, the fair trade regulator has asked the 12 entities to "cease and desist" from indulging in anti-competitive practices.
These entities are suppliers of CN containers -- those with disc required for making 81 mm bomb -- to three ordnance factories spread across Maharashtra.
In its ruling, finalised after nearly two years of ordering a detailed investigation into the matter, the Commission has imposed a total penalty of little over Rs 3 crore on the 12 entities.

The 12 entities (or opposite parties) are Sheth & Company, Veekay Enterprises, Sai Trading, Sai Industries, Shree Polymers, Sai Enterprises, Mac Polymer, Miltech Industrial Pvt Ltd, Nityanand Udyog, Interplas (India) Pvt Ltd, Narendra Explosive Ltd and Narendra & Company.
They were supplying the material to Ammunition Factory, Khadki, Ordnance Factory Dehu Road, both in Pune; and Ordnance Factory, Chandrapur. The 81 mm disc with container is an essential raw material needed for producing 81 mm bomb.

The entities have indulged in anti-competitive practices by way of "price fixing and collusive bidding", the Competition Commission of India (CCI) said in its order, dated June 10, and made public today.

Citing the case records, the regulator said that at least one firm has been ousted from the market between 2009 and 2013 period, indicating that the agreement may have also led to driving the existing competitors out of the market.
"... In the absence of any such an anti-competitive agreement, the bidders would have not only competed against each other (on price) but may have also undercut each other to secure the contract which would have resulted in lower prices for the consumers," it said.
The Commission noted that the three ordnance factories, have also been deprived of the benefits that could have accrued to them on account of the competitive bidding process.

Rejecting the opposite parties' argument that agreement between them resulted in stabilisation of prices, the Commission said that on the contrary, they have "artificially inflated the prices at which the contracts were awarded to them".
There is no evidence to show that the agreement amongst the opposite parties resulted in improvement in production or distribution of goods or promotion of scientific, technical and economic developments, the order noted.
The matter was taken up on suo-motu basis. In May 2013, the regulator had ordered a detailed probe by its investigation arm Director General, who submitted the report on August 2014.