Case Law Details
XYZ Vs HP India Sales Private Limited (Competition Commission of India)
Competition Commission of India (CCI) dismissed allegations of bid rigging and cartelization filed under Section 19(1)(a) of the Competition Act, 2002, against HP India Sales Pvt. Ltd. and its resellers. The case was initiated based on a complaint alleging anti-competitive practices in two government tenders floated by Gurugram Metropolitan Development Authority (GMDA) and Faridabad Metropolitan Development Authority (FMDA). The complaint alleged that HP India and its resellers colluded to inflate prices and restrict competition in these tenders.
The Informant alleged that bid rigging occurred in tenders for procurement of inkjet/LED A0-A4 size plotters/printers with extended warranties. The tenders were said to have restrictive specifications, limiting participation to specific products. The Informant pointed out that identical HP models were quoted by multiple bidders, all offering a five-year warranty, which allegedly indicated collusion. Additionally, the Informant claimed that the cumulative price of individual components was lower than the quoted bundle price, suggesting price manipulation.
However, the CCI rejected these claims, noting several key findings. Firstly, the GMDA tender explicitly required a five-year onsite warranty, dispelling allegations that identical warranty periods among bidders indicated cartelization. Secondly, the FMDA tender saw participation from bidders quoting different brands, undermining claims of collusion. The Commission emphasized that procurers have the discretion to specify product requirements, and such specifications cannot be considered anti-competitive without substantive evidence.
The Commission also addressed the allegation that the specifications in the GMDA and FMDA tenders excluded participation by manufacturers of LED printers, such as Canon and Epson. It noted that the procuring authorities have the prerogative to select products that best meet their operational and budgetary needs. The CCI observed that the Informant failed to provide evidence supporting claims of price manipulation or collusion, including specific data on individual component costs.
Finally, the CCI concluded that there was no prima facie case of contravention of Section 3 of the Competition Act. The absence of credible evidence and the procurers’ freedom to set specifications led the Commission to dismiss the case under Section 26(2) of the Act. The Informant’s identity was granted confidentiality for three years as per CCI regulations.
Judicial Precedents:
The CCI referred to established principles in competition law, emphasizing the necessity of evidence to substantiate allegations of anti-competitive conduct. In previous cases, such as Re: Alleged Cartelization by Cement Manufacturers (Case No. 29/2010), the Commission highlighted the importance of direct or circumstantial evidence in proving cartelization. Similarly, in XYZ Vs Indian Oil Corporation (Case No. 50/2018), the CCI held that bidders’ adherence to tender specifications alone does not indicate collusion unless supported by additional evidence.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
Order under Section 26(2) of the Competition Act, 2002
1. The present Information has been filed by an individual under Section 19(1) (a) of the Competition Act, 2002 (‘the Act’) against HP India Sales Private Ltd. (‘OP-1’), Wideprint Systems and Solutions (‘OP-2’), Digital Global (‘OP-3’), Capricot Technologies Private Limited (‘OP-4’), Samman Consultants (‘OP-5’), Sigma eSolutions Private Limited (‘OP-6’), Transcon Electronics Pvt Ltd. (‘OP-7’), and KR Enterprises (‘OP-8’) alleging contravention of provisions of Section 3 of the Act.
2. The Informant has sought confidentiality over its identity including the name and contact details.
3. The Informant has alleged existence of circumstantial/economic evidence of bid rigging by OP-1 and its resellers arrayed as OP-2 to OP-8, engaged in identical or similar trade of goods.
4. The Informant has alleged that bid rigging has taken place in two tenders floated at Government e-Marketplace (‘GeM’) GeM Bid No. GEM/2024/B/4889227 dated 25.05.2024 floated by Gurugram Metropolitan Development Authority, Gurgaon, Haryana (hereinafter ‘GMDA Tender’) and GeM Bid No. GEM/2024/b/5094056 dated 26.06.2024 floated by Faridabad Metropolitan Development Authority, Faridabad, Haryana (hereinafter ‘FMDA Tender’) having similar specifications, issued for procurement of inkjet/LED A0-A4 size plotter/printer with 5 years’ extended warranty covering print head, maintenance box and 2 set ink cartridges.
5. It is further stated that GMDA and FMDA tenders excluded participation by other multinationals such as Canon India Pvt Ltd., Gurgaon and Epson India Pvt Ltd. Bangalore as both do not have a product meeting tender specification. As per the Informant, manufacturers/suppliers of LED Printers could not participate in the above tenders since LED printers are costlier than inkjet printers.
6. The Informant has further stated that a tender GeM Bid No. GEM/2024/B/4713266 dated 11.03.2024 was floated by BHEL Noida for procurement of Mono Plotter printer (hereinafter ‘BHEL Tender’), of exactly the same specifications with the difference that requirement was for Mono Inkjet/LED plotter printer instead of colour printer. Therefore, manufacturers of Mono LED Printers could also participate. Since HP India (OP-1) does not manufacture a Mono Printer, exactly the same product which was offered in GMDA tender and FMDA tender by OP-2 e. HP reseller, was quoted in the BHEL tender.
7. As per the Informant, all the aforesaid tenders were won by M/s Wideprint Systems and Solutions (OP-2).
8. Regarding the aforementioned tenders, the Informant has inter alia asserted as under:
a. Aggregate of prices of individual components of the tender item e. printer, 2 cartridges, 5 years’ warranty, print head, maintenance cost etc. is approximately 19.40 lacs whereas the higher amount were charged by OP-2 in GMDA and FMDA tenders.
b. In GMDA tender, five bidders viz. Capricot Technologies Pvt. Ltd. (OP-4), Digital Global (OP-3), KR Enterprises (OP-8), Samman Consultants (OP-5) and Wideprint Systems & Solutions (OP-2), quoted HP product and all of them quoted for 5 years’ warranty instead of minimum warranty specified for three years’ in the GMDA tender.
c. In the FMDA tender, the specification was same as in GMDA tender except warranty was specified for five years. Further, four bidders who participated in FMDA Tender were- Digital Global (OP-3), Wideprint System and Solutions (OP-2), Sigma E solutions P Ltd. (OP-6) and Transcon Electronics Pvt Ltd. (OP-7), out of which Digital Global (OP-3) quoted ROWE brand for which the deemed OEM is OP-2, whereas OP-2 itself quoted HP product instead of own ROWE brand. It implies that OEM (OP-2) authorised a bidder (Digital Global) to quote against itself.
d. In the BHEL tender, the bid was for same specification but for a mono plotter printer instead of colour printer and the payment was quarterly spread over a period of five years payable within three months after the end of the quarter. OP-2 quoted the color printer variant at a price of Rs 17.60 lacs and won the bid. Considering this as benchmark it can be seen that GMDA and FMDA ended up paying substantially more for the same product.
9. The Informant has prayed for causing an investigation into the matter and penalise bid riggers in order to prevent tax payers’ money from being siphoned off.
10. The Commission considered the matter in its ordinary meeting held on 15.01.2025 and decided to pass an appropriate order in due course.
11. The Commission notes that the gravamen of allegations in the instant matter is alleged bid rigging in tenders floated by GMDA and FMDA in contravention of provisions of Section 3 of the Act.
12. At the outset, the Commission notes that BHEL tender is not at par with GMDA and FMDA tenders since the former pertains to leasing of two mono LED/inkjet plotter printers for five years, whereas the latter pertained to purchase of single multifunction colour inkjet plotter printer. Moreover, BHEL tender is found to be cancelled as per the annexures to the Information. The Commission also noted that the Informant has alleged cartelisation in GMDA and FMDA tenders while making the bidders in these tenders as opposite parties.
13. With regard to GMDA and FMDA tenders, the Commission found them to be similar in specification including quantity, features, product type etc. except that GMDA tender included buyback of a non-functional printer as a pre-condition.
14. Regarding GMDA tender, the Commission noted that five bidders participated and all of them quoted HP product. Capricot Technologies (OP-4) and Wide Print (OP-2) offered same HP model e. HP XL 3800 including set of 2 cartridges, print heads, Maintenance box and five-year year warranty; whereas, other three bidders viz. Digital Global (OP-3), Samman Consultant (OP-5) and KR enterprises (OP-8) quoted HP XL 4200, all quoted with five-year warranty. Out of the five bidders, four got technically qualified and OP-2 emerged as L-1 bidder. It is asserted by the Informant that GMDA tender specification required minimum three years’ warranty but all the bidders quoted for five-year warranty which as per the Informant, indicated collusion. In this regard, the Commission found that the Informant has failed to notice the additional buyer conditions- ‘Onsite OEM Warranty – 5years’ stipulated in the GMDA tender which prompted the bidders to quote for five-year warranty. This dispels the alleged suspicion of cartelisation on the part of the bidders on account of same warranty period.
15. With regard to FMDA tender, the Commission noted that four bidders participated, among which three bidders Wide Print (OP-2), Sigma eSolutions (OP-6) and Transcon (OP-7) quoted for HP XL 3800 including set of 2 cartridges, print heads, Maintenance box and five-year warranty, whereas remaining one bidder Digital Global (OP-3) quoted ROWE brand for which OP-2 is stated to be deemed OEM. In this regard, the Commission noted the allegation of the Informant that OEM (OP-2) authorised a bidder (Digital Global) to quote against itself. In this regard, the Commission noted that OP-2 not quoting the same brand as that quoted by OP-3 cannot be said to bid against itself. Both the bidders are quoting different brands of different OEMs as per their individual choice.
16. The Informant has alleged the product specification in GMDA and FMDA tenders to be restrictive in nature, preventing participation of LED printers. The Informant has also alleged the cumulative price for individual components to be substantially more than the composite bid prices quoted by the bidders on GeM portal. In this regard, the Commission notes that normally a procurer has the choice to procure goods and services as per its needs and requirements. The procurer/consumer, has the freedom to specify the kind of product or service, warranty, cartridges etc. and the same cannot be dictated to the procurer. In exercise of such freedom, the procurer specifies the nature, manner and mode etc. based on its requirement, budgetary constraints and other commercial considerations to fulfill its objective or functions. The Commission observes that the price of maintenance box, print heads, cartridges were neither provided by the Informant nor appeared to be available in public domain to substantiate this assertion. The Commission is of the view that like the product specifications, it is the prerogative of the procurer either to procure individual items from GeM portal or to procure a bundle of products and/or services based on its specific requirements to meet its objective.
17. In view of the foregoing, the Commission is of the view that there appears no material substantiating the allegations of cartelisation by the OPs.
18. In the facts and circumstances of the present case, the Commission finds no prima facie case of contravention of the provisions of Section 3 of the Act to be made out against the OPs. Accordingly, the information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act.
19. Before parting with the order, the Commission notes that the Informant has prayed for grant of confidentiality over its identity including name and contact details. Accordingly, in terms of Regulation 36(1) of the Competition Commission of India (General) Regulations, 2024, the Commission decides to keep the identity of the Informant including name and contact details confidential for a period of three years from the date of passing of this order.
20. The Secretary is directed to communicate to the Informant, accordingly.
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