In re Private Entrepreneurs Godowns Association Vs Punjab State Warehousing Corporation (CCI)
As far as the allegations of there being an anti-competitive agreement in violation of competition law amongst OP-1 and OP-2 are concerned, the Commission observes that the Informant, besides making bald allegations, has placed on record no material, which may even prima facie hint at there being an ‘agreement’ between OP-1 and OP-2, for not increasing the rates of rent for hiring of godowns from private parties, in the State of Punjab.
Further, OP-1 is stated to be a statutory body entrusted with the responsibility of storage, handling and warehousing of agricultural produce and other notified commodities. On the other hand, OP-2 is the state government for the State of Punjab. Though it is also stated to be, inter alia, engaged in procurement of goods for storage through DFSC, in view of the Commission, OP-2 indulging in procurement and storage of foodgrains through other agencies like PUNGRAIN, PUNSUP etc. does not put OP-1 and OP-2 to be engaged in identical or similar trade of goods or provision of services. Further, they also cannot be said to be in products/services at different levels in the production chain.
As such, in the opinion of the Commission, any agreement between OP-1 and OP-2 with regard to procurement of foodgrains for storage and hiring of godowns from private entrepreneurs for such storage purposes, cannot be analysed under the provisions of Section 3(3) of the Act. In view of the above, the Commission finds that no case of contravention of even the provisions of Section 3 of the Act, is also made out against the OPs, in the present matter.
Thus, based on the foregoing observations, the Commission is of the considered opinion that no case of contravention of any of the provisions of the Act is made out against either OP-1 and/or OP-2 in the present matter. As such, the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act.
FULL TEXT OF THE JUDGMENT/ORDER OF COMPETITION COMMISSION OF INDIA
The present Information was filed by Private Entrepreneurs Godowns Association (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against Punjab State Warehousing Corporation (‘OP-1’) and State of Punjab (‘OP-2’) (hereinafter ‘OPs’), alleging, inter alia, contravention of the provisions of Sections 3(3) and 4 of the Act.
2. The Informant is stated to be a registered association of private entrepreneurs in the State of Punjab which provides storage space for storage of foodgrains to various procurement/warehouse agencies in the state.
3. OP-1 is stated to be a statutory body established for the purposes of warehousing of agriculture products under the Warehousing Corporations Act, 1962. It is stated to have two shareholders OP-2 and Central Warehousing Corporation (‘CWC’) with 50% share each. It is stated to be a public sector enterprise entrusted with the responsibility of storage, handling and warehousing of agricultural produce and notified commodities by offering warehouses as scientific storage structures especially constructed for protection of quantity and quality of stored products. These warehouses may either be constructed by it or may be hired from private godown owners. OP-1 is stated to be the largest procurer of warehouses from private godown owners in the State of Punjab as well as the largest State Warehousing Corporation (‘SWC’) in India which accounts for more than one-third of the total combined storage capacity of all SWCs in India.
4. OP-2 is the state government for the State of Punjab and is stated to be the majority shareholder in OP-1. It is stated to appoint the major decision makers in OP-1 and also the other state agencies which undertake procurement of goods for storage through Department of Food Civil Supplies and Consumer Affairs, Government of Punjab (‘DFSC’). DFSC is stated to have various wings including two major wings i.e. Punjab Grains Procurement Corporation Ltd. (‘PUNGRAIN’) and Punjab State Civil Supplies Corporation Ltd. (‘PUNSUP’) which are stated to undertake procurement of goods for storage in the State of Punjab.
5. As per the Informant, in 2000-01, there was a significant requirement of storage capacity by Food Corporation of India (‘FCI’) for storing foodgrains; however, there was a storage gap. Thus, the Government of India decided to rope in private investors for building of storage capacity. Accordingly, FCI was advised to direct building of storage capacities by private investors in the States of Punjab and Haryana. Therefore, OP-1 and to some extent, other state agencies directed private parties to construct foodgrains storage godowns for a fixed rent under Ten Year Guarantee Scheme (‘TYGS’) in 2000-01 and Seven Year Guarantee Scheme (‘SYGS’) in 2002.
6. In furtherance of the same, private godown owners including members of the Informant, invested substantial amount for building godowns (running into crores of rupees) in the State of Punjab for a capacity of over 25 LMT as per the requirements stipulated by FCI, and a majority of these godowns constructed were leased by OP-1. However, the guarantee periods under TYGS and SYGS expired in 2011 and 2009 respectively. Thereafter, the private godowns owned by members of the Informant are being hired by OP-1 on General Hiring Basis (‘GHB’) i.e. on annual basis.
7. As per the Informant, the amount of rent receivable by the godown owners for hiring of their godowns is fixed for each year of hiring by OP-1 based on the amount sanctioned and received by it from the FCI for the said hiring. FCI revises the charges which are to be paid to godown owners from time to time. The storage charges payable by FCI to SWC are at par with the charges payable to CWC. However, the Informant alleged that despite revision of charges by the FCI from time to time, the OPs have not taken any steps to increase the charges to be paid to the godown owners in the State of Punjab post expiry of TYGS and SYGS.
8. In this regard, the Informant stated that it has also addressed several representations to the concerned authorities in the State of Punjab, whereupon several meetings have been held. Pursuant to the same, when Haryana State Warehousing Corporation (‘HSWC’), the counter-part statutory organisation of OP-1, increased the rent with effect from 01.01.2012, the same was duly followed by the OPs also. However, as per the Informant, HSWC increased rent rates multiple times thereafter also, on 01.01.2014, again on 01.01.2017 and 01.07.2020, and thereafter in April 2021, but the OPs did not follow suit post 01.01.2012. The Informant stated that HSWC is following the pattern of CWC with regard to revision of storage charges with some modifications. However, the same is not being done by OP-1.
9. Hence, the Informant stated that it again approached the OPs in this regard, but to no avail.
10. The Informant averred that FCI regularly pays storage charges to the OPs to be disbursed to the private godown owners. It is a matter of record that such charges are being revised by the FCI from time to time. However, as per the Informant, the OPs are not revising the rents paid to the private godown owners in the State of Punjab in accord with the amounts disbursed by the FCI. In this regard, the Informant provided the following tabular data showing the unreasonable and meagre rent paid by OP-1 to the members of the Informant in comparison to the storage charges paid by FCI to OP-1 over the years:
(Amount in ₹/quintal p.m.)
