ADGST (SM) Army Purchase Organisation Vs Gokul Agro Resources Ltd. (Competition Commission of India)
Presence of common ownership or directors does not automatically indicate anti-competitive practices unless accompanied by evidence of collusion
Competition Commission of India (CCI) reviewed allegations of cartel formation in a tender process initiated by the Army Purchase Organisation (APO) for procuring edible oil for the Armed Forces. The case was brought under Section 19(1)(b) of the Competition Act, 2002. The APO claimed that two bidders, Gokul Agro Resources Ltd. and Gokul Agri International Ltd., participated in the tender as separate entities but were likely sister concerns, potentially contravening Section 3(3)(d) of the Act, which prohibits bid rigging.
The APO noted that while the two companies won bids in separate schedules, their close competition raised concerns about potential collusion. However, during the tender evaluation, no commonalities in documentation or operations were observed to substantiate the claim of cartel formation. Furthermore, both firms participated in reverse auctions and reduced their rates independently. The APO also cited a 2015 Gujarat High Court ruling indicating that these firms were previously part of the same management group, adding to their suspicion.
The CCI analyzed the claims, referencing past cases, including XYZ Vs. Continental Milkose India Limited and Suo Motu Case No. 03 of 2018, where it was held that mere common ownership or directors are insufficient to establish anti-competitive practices. The Commission emphasized that evidence of collusion, such as bid rotation or mutual agreements, is critical to proving contraventions under Section 3 of the Act.
