Mere having common directors may not ipso facto give rise to anti-competitive concerns: CCI

Case Details: Virendra Kumar Singh v. Nandal Finance & Leasing (P.) Ltd. - [2022] 138 taxmann.com 354 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta | Chairperson, Ms Sangeeta Verma & Bhagwant Singh Bishnoi | Member

Facts of the Case

In the instant case, an information was filed by an Informant u/s 19(1)(a) of the Competition Act, 2002 against M/s Nandal Finance & Leasing Private Limited (‘OP-1’/ ‘Nandal’) and M/s JPM Industries Ltd. (‘OP-2’/ ‘JPM’) for alleged contravention of the provisions of Section 3 of the Act in the disinvestment process of Central Electronics Limited (CEL).

The Informant stated that CEL is known for the development of products in the domain of strategic electronics through its own R&D efforts as well as in collaboration with the Council of Scientific and Industrial Research (CSIR), Defence Research and Development Organisation (DRDO) laboratories, and other institutions.

The Informant averred that CEL is being disinvested to a private company by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, and Ministry of Science and Technology at a very low price and without adhering to any transparency in the disinvestment process. Further, there is no clarity about the disinvestment process to employees working in CEL as well as to the public at large.

The Informant stated that, under the disinvestment process of CEL, bids were received from only two bidders, namely, OP1 and OP2, who quoted Rs. 210 crores and Rs. 190 crores, respectively. Further, the Informant averred that there is a relation between the directors of the group companies of OP1 and OP2.

The Informant alleged bid-rigging in the disinvestment process of CEL. Accordingly, prayed to the Commission to order an investigation into the matter. Further, the Informant also requested the Commission to intervene and restrain the process of disinvestment of CEL during the pendency of an investigation into bid-rigging. The Informant also prayed for interim relief under Section 33 of the Act.

The Commission viewed that merely having common business linkages between the bidders as projected by the Informant, in itself, cannot be the sole basis to suggest meeting of minds between the bidders in the bidding process.

With regard to other allegations regarding the disinvestment process, the Commission observed that the disinvestment of CEL has been impugned by the Informant, which is a policy decision of GoI, and the Commission is not the appropriate forum to determine the merits of such disinvestment in relation to issues such as the adequacy of Reserve Price.

CCI Held

The Commission held that no prima facie case of contravention of any of the provisions of Section 3 of the Act exists against the Opposite Parties and therefore, the matter be closed forthwith under the provisions of Section 26(2) of the Act. Consequently, no case for grant of relief(s) as sought under Section 33 of the Act arises, and the same is also rejected.