No abuse of dominance arises when notice inviting tenders stipulated rejection of a bid for running a similar business

Case Details: Swastik Road Carrier v. Central Railside Warehouse Co. Ltd. - [2022] 138 taxmann.com 40 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson
  • Ms. Sangeeta Verma and Bhagwant Singh Bishnoi, Member

Facts of the Case

In the instant case, the informant (sole proprietor of a goods carrier firm) filed an information u/s 19(1)(a) of the Competition Act, 2002 against the Central Railside Warehouse Company Limited (Opposite Party-OP) alleging contravention of the provisions of the Act.

The OP, a Government of India enterprise, was incorporated for the purposes of planning, developing, promoting, and acquiring railside warehousing complexes/terminals/multimodal logistics hubs on land leased or acquired from Indian Railways and was stated to provide state of the art warehousing facilities and competitive modes of handling and transportation facilities of cargo.

The OP issued ‘Notice Inviting Tenders’ (NIT) inviting bidders to undertake the projects/services all over India. The Informant submitted its bid in response to the NIT. The informant stated that bid was rejected by the OP citing conflict of interest clause, whereby the OP had the right to reject a bid if the bidder was found to be engaged in similar line of business as that of the OP.

Subsequently, a new NIT was published by the OP, incorporating a condition that the OP has a right to reject the bid of a bidder if the bidder is running a similar line of business as that of OP such as the business of operating Private Freight Terminal (PFT) etc., in the region. Further, the NIT provided that in case of breach of condition, the tenderer shall be disqualified/blacklisted for the next three years from participating in any tender floated by the OP.

The Informant approached various authorities regarding the impugned tender and requested them to direct the OP to invite fresh bids and cancel the existing tender. In addition to this, the Informant raised the issue of corruption in the impugned tender floated by the OP.

After considering the information, the CCI directed OP to file its reply along with details of the players who were operating in the similar business and associated activities like that of the OP in the concerned region as well as those who are operating at State/ Pan-India level. In response to this, the OP provided an illustrative list of some of the Private Freight Terminal Operators operating in similar business as that of OP to the CCI.

Despite grant of opportunities, the Informant didn’t file any response to the reply of the OP. Accordingly, the CCI considered the matter on the basis of material available on record and decided to pass an appropriate order in due course.

CCI Held

The CCI held that the term enabling OP to disqualify bidders due to conflict of interest does not appear to be unfair or anti-competitive in any manner. Hence the issue of abuse of dominance does not arise and thus, the impugned clause of the NIT does not appear to contravene the provisions of the Act.

Further, the CCI held that no case can be made out against the OP. Accordingly, the Information was ordered to be closed in terms of the provision contained in Section 26(2) of the Act.