CMM/ Loco BLW Varanasi Vs Kharagpur Metal Reforming Industries (Competition Commission of India)
The Competition Commission of India (CCI) considered a case referred by the Chief Material Manager (CMM)/ Loco Banaras Locomotive Works (BLW), Varanasi, regarding alleged cartelisation in the supply of Motor Suspension Units (MSU) for locomotives to various railway production units. The reference, filed under Section 19(1)(b) of the Competition Act, 2002, targeted Kharagpur Metal Reforming Industries Private Limited (OP-1) and Kay Pee Equipment Private Limited (OP-2) for supposedly contravening Section 3(3)(d) read with Section 3(1) of the Act by forming a cartel or engaging in bid rigging. The Informant stated that previous vigilance investigations by BLW, DMW, and CLW had indicated potential cartel formation, particularly concerning the procurement of MSUs, prompting the Railway Board Vigilance to suggest referring the matter to the CCI.
The case details highlighted that MSU, an MS casting item, is essential for manufacturing WAG-9 and WAP-7 locomotives. The vendor development authority for MSU transferred from RDSO to CLW in 2017. While consumption of MSUs increased significantly between 2017-18 and 2019-20, the number of approved vendors did not grow proportionally. Issues were raised regarding delays in vendor approval, potential barriers to entry for new firms, and alleged resulting procurement at higher rates. The Informant presented data on tender participation, noting interest from numerous vendors beyond the approved list. Allegations of bid rigging were based on the observation that the quoted rates of OP-1 and OP-2 in subsequent tenders showed similar increasing trends with minimal differences, suggesting a possible arrangement for quantity distribution rather than genuine competition tied to input costs like the Wholesale Price Index of MS Casting.
