Joint Tender by Oil Cos. for Ethanol Wasn’t Ant-Competitive | Price Parallelism Alone Insufficient to Prove Cartel

Case Details: India Glycols Ltd. v. India Glycols Ltd. - [2024] 164 taxmann.com 639 (CCI)

Judiciary and Counsel Details

• Ms Ravneet Kaur, Chairperson Anil Agrawal, Ms Sweta Kakkad & Deepak Anurag, Member
• Manas Kumar Chaudhari, Aman Baroka, Peter Paul, Ms Shruti Iyer, Ms Nishita Jagetia, Sridhar Potaraju, Sr. Adv. Ms Ankita Sharma, Ms Shiwani Tushir, Aayush, Rajat Srivastava & Laut Mohan, Advs. for the Appearing Parties.

Facts of the Case

In the instant case, pursuant to Notification dated 02.01.2013 issued by the Ministry of Petroleum & Natural Gas, Government of India (MoP& NG) mandating Oil Marketing Companies (OMCs) viz., IOCL/HPCL/BPCL to sell ethanol-blend Petrol (EBP) to achieve 5% Ethanol blending across the country, a joint tender was issued by all three OMCs for procurement of Ethanol, a by-product of sugar production.

The Informant filed an information impugning a joint tender floated by OMCs and alleged that bidders, specifically those of the State of Uttar Pradesh, indulged in cartelisation and quoted identical prices in contravention of the provisions of Section 3 of the Competition Act, 2002.

It was noted that MoPNG, the Government of India, directly controlled all OMCs, and they were obligated to act according to the direction(s) of the Ministry. Since EBP policy was intended to be a continuous process, issuance of independent tenders would have led to inefficiencies.

There had been no attempt by OMCs to determine, directly or indirectly, the price of Ethanol or to limit or restrict the supply of Ethanol. Further, the total quantity of Ethanol that was required by OMCs was well known since it arises from gazette notification and would not change whether a single tender or separate tenders were issued.

Conversely, from an administrative and public benefit perspective, as well as in light of the mandate of the Government of India, there were a lot of factors necessitating joint tendering that outweigh the option of separate tendering. Such joint tendering had also not been found to have resulted in any appreciable adverse effect on competition in the market for the supply of Ethanol.

Accordingly, the issuance of joint tender purely on account of commercial and operational considerations and to meet the Government’s directives in a cost-effective manner could not be construed as anti-competitive or in violation of provisions of Section 3(3) of the Act.

It was also noted that it was no longer res integra that price parallelism could not be the sole criteria to establish a cartel, and evidence of parallel pricing must be supplemented with “plus factors” showing that alleged conduct was conscious and not the result of independent business decisions and in instant case investigation had not brought out any price parallelism amongst bidders.

CCI Held

The CCI held that no details of any meeting or involvement of sugar mills associations and their office-bearers with individual mills (bidders) who participated in the tender were found, so allegations against such associations could not be substantiated.

Further, the CCI held that since the investigation had not produced sufficient evidence on record to arrive at a finding of contravention of the provisions of the Act against any OP in instant matters, the matters were directed to be closed forthwith.