Compat sets aside CCI order against 11 shoe-makers

The Competition Appellate Tribunal (Compat) has set aside a CCI order against 11 shoe manufacturers, who were fined Rs 6.25 crore by the regulator for alleged collusive bidding in a government tender.
In 2013, the Competition Commission of India (CCI) imposed a penalty on each of the contravening company at the rate of 5 per cent of the average turnover of the company after a DG-level investigation.
Following the ruling, the companies -- AR Ploymers, MB Rubber, Tirupati Footwear, HB Rubber, Rajkumar Dyeing & Printing Works, Preet Footwear, SS Rubbers, Shiva Rubber Industries, Derpa Industrial Polymers, RS Industries and Puja Enterprises -- approached the tribunal and appealed against the matter.

Setting aside the ruling, the tribunal in an order dated April 12 said, "The commission committed grave error by imposing penalty on the appellants at 5 per cent of their total turnover in respect of all the products manufactured by them, including the Jungle Boots".
The tribunal observed that some of these companies are producers of multiple products and cited a previous order where it was held that the turnover of only the product in question should have been taken into consideration for imposing penalty.
The tribunal further said that the commission has also ignored the principles laid down by the Supreme Court and the High Courts on the interpretation of statutes, which confer power upon the competent authority to impose penalty on a person who is found guilty of having acted in violation of the particular provision.

Compat also directed the concerned authority to refund the penalty amount within a period of three months, failing which, the appellants (the firms) would be entitled to interest at the rate of 12 per cent per annum.

The case was initiated by CCI on a reference made by Director General-Supplies & Disposal (DGS&D), Department of Commerce pertaining to a tender for conclusion of new rate contracts for polyester blended duck ankle boots rubber sole mainly used by paramilitary, state police forces and railways.
It was alleged that there was bid rigging and market allocation by the suppliers while bidding against the tender enquiry.

After an investigation, CCI held that the bidder-suppliers by quoting identical or near identical rates had indirectly determined prices rates in the Rate Contracts finalised by DG S&D and indulged in bid rigging/ collusive bidding.
Further, CCI had noted that the firms also controlled the supply of the product and shared the market of the product amongst themselves under an agreement/ arrangement in contravention of certain provisions of the Competition Act.