Competition LawRulings

CCI penalizes 6 firms for “bid rigging” in PMC tenders, invokes Lesser Penalty Provisions

CCI Updates

CCI imposes penalty for bid rigging/ collusion in 5 tenders floated by Pune Municipal Corporation (‘PMC’) on following 6 firms namely, Fortified Security Solutions (Fortified), Ecoman Enviro Solutions Pvt. Ltd. (Ecoman), Lahs Green India Pvt. Ltd. (Lahs Green), Sanjay Agencies, Mahalaxmi Steels ( Mahalakshmi) and Raghunath Industry Pvt. Ltd. (Raghunath).

CCI holds that the above mentioned companies had violated Section 3(3)(d) read with Section 3(1) of the Competition Act 2002 for bid rigging/ colluding bidding in the 5 tenders for the Design, Supply, Installation, Commissioning, Operation and Maintenance of Municipal Organic and Inorganic Solid Waste Processing Plant(s)”. CCI further observes meeting of mind and co-ordination between various individuals which included the proprietor/ partner/ director of the firms to rig the tenders by way of submitting proxy/ cover bids.

CCI invokes Section 46 of the Competition Act, 2002 (‘the Act’) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’) after observing that four bidders i.e. Mahalakshmi, Lahs Green, Sanjay Agencies and Ecoman after observing that all six firms had approached CCI as lesser penalty applicants. Hence, CCI slaps fine of Rs. 13.07 Lakhs, Rs. 45.20 Lakhs, Rs. 42 Lakhs, Rs. 1.51 Crores, Rs. 3.36 Crores and Rs. 30.55 Lakhs on six firms namely Fortified, Ecoman, Lahs Green, Sanjay Agencies, Mahalakshmi and Raghunath, respectively, in terms of Section 27 (b) of the Act. Further, CCI imposes penalty on firms at the rate of 10 % of their profit for the years 2012-13, 2013-14 and 2014-15 i.e. three years preceding the year in which collusion took place. Additionally, considering totality of facts and circumstances of the case, penalty leviable on individual officials of four firms namely Ecoman, Lahs Green, Sanjay Agencies and Raghunath was computed at the rate of 10 percent of their average income for the same three years. No penalty was imposed on individuals of Fortified and Mahalakshmi as these are proprietorship firms.

CCI further observes existence of cartel hence grants Mahalaksmi and Lahs Green and their individuals 50% reduction in penalty than otherwise leviable on them. Sanjay Agencies and Ecoman, along with their individuals, were granted 40 and 25 percent reduction in penalty respectively. Pursuant to reduction, penalty imposed on Mahalkshmi was Rs. 1.68 crore, on Lahs Green was Rs. 21 Lakh, on Sanjay Agencies was Rs. 90.64 Lakh and on Ecoman was Rs. 33.90 Lakhs.

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