CCI Finds 17 Vendors Guilty Of Bid Rigging In Assam Police Housing Tenders, Issues Cease And Desist Order

The Competition Commission of India has held 17 vendors guilty of bid rigging in tenders floated by the Assam Police Housing Corporation Limited (APHCL), finding that the bidders colluded through bid rotation and cover bidding to manipulate the tender process.

However, the Commission declined to impose any monetary penalty, instead directing the vendors to cease and desist from such anti-competitive practices and warning of stricter consequences in case of any repeat violations.

A coram of Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad and Deepak Anurag observed:

“The Commission notes that the OPs have indulged in bid-rigging by way of bid-rotation and/or cover bidding, with the intent to manipulate the tender process to reduce the competitive intensity of the entire bidding process in the impugned tenders. The finding of bid-rigging in relation to all the OPs, is premised on the evaluation of evidence in the form of same mistakes in bid submissions, identical IP addresses, CDR details, DDs with consecutive numbers, etc..”

The case arose from a complaint dated August 10, 2020, by the Office of the Accountant General (Audit), Assam, alleging bid rigging in tenders floated by APHCL for internal and external electrification works in police station buildings under the Mission of Overall Improvement of Thana for Responsive Image (MOITRI) Scheme.

APHCL, a State Public Sector Undertaking under the Government of Assam, had floated tenders for civil and electrical works across 73 police stations, with electrical works awarded in 2018. An audit of the MOITRI Scheme found that 17 approved vendors had rigged the tenders, resulting in higher procurement costs of at least Rs 7.56 crore.

Based on the complaint, the Commission took suo motu cognisance and directed an investigation by the Director General.

The Director General's investigation revealed patterns such as bid rotation, identical pricing, cover bidding, use of common IP addresses, replication of errors in tender estimates, and submission of sequentially numbered demand drafts.

The opposite parties contended that the bidding patterns were attributable to market conditions, standardised costs and business practices. They argued that the use of common IP addresses was due to limited cyber infrastructure, with multiple bidders relying on the same facilities for tender submission. They also submitted that sequentially numbered demand drafts were coincidental and did not indicate any agreement.

The Commission, however, observed that across the tenders, L-1 bidders quoted rates identical to the consultant's estimates, while L-2 and L-3 bids were consistently higher in fixed multiples.

“The bidding pattern adopted by the OPs show that the difference in price quoted was not due to other factors like cost of transportation, tax etc. as submitted by the OPs, but only under a scheme of collusive bidding. Such a pattern emerged as majority of bids were prepared and submitted by a single person/ entity, on behalf of all other bidders participating in the tenders."

It also noted that the mistakes made by the opposite parties were identical and that the bidding patterns across all 73 tenders reflected predetermined behavior.

“Thus, the Commission is of the view that all the OPs and their individuals have entered into agreements and indulged in bid-rigging, thereby violating the provisions of Section 3(3)(d) read with Section 3(1) of the Act.”

The Commission further held that all the sole proprietors of the opposite parties are liable for anti-competitive conduct under Section 48 of the Competition Act.

“The Commission notes that cartelisation, including bid rigging, is a pernicious form of anti-competitive conduct as enunciated under the provisions of Section 3 of the Act. None of the OPs or their individuals have been able to rebut the clinching evidence found against them by the DG of having indulged in anti-competitive conduct and manipulating the bids/bid rigging in respect of tenders floated by APHCL.”

Considering mitigating factors, the Commission did not impose any monetary penalty but directed the opposite parties to cease and desist from indulging in such anti-competitive practices.

“It may, however, be noted that any relapse into such conduct by the OPs would be construed as recidivism with attendant aggravated consequences not only for the OPs but also their individuals in their personal capacity.”

Accordingly, the Commission disposed of the matter.

For Bidders: Advocates Debashish Deka, Mustafa Ali, Rajesh Rathore, Vishal Khari, Vivek Pandey, Shreya Kapoor, Sasthibrata Panda, M.S. Sharma, Usha Das and Sangita Tahbildar