CCI Finds Four Odisha Truck Associations Guilty Of Cartelisation, Orders Cease-And-Desist

The Competition Commission of India (CCI) on Tuesday held four truck owners' associations operating in Odisha's mining belt guilty of cartelisation and anti-competitive conduct for fixing freight rates and restricting independent transporters from carrying minerals from mining areas.

It directed the associations to cease and desist from the practices and said the issue of monetary penalties would be considered separately after receiving their financial details.

A coram of Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad and Deepak Anurag found that the associations had contravened Sections 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act, 2002.

The case arose from an information filed by the Indian Steel Association (ISA) against Bhadrasahi/Guali Truck Association, Bonai Truck and Tipper Owners' Association, and Keonjhar District Truck Owners' Association. During the proceedings, the Competition Commission added Joda Truck Owners' Association as a fourth opposite party.

ISA alleged that the associations were fixing freight rates for transportation of iron ore and other raw materials at rates higher than those prescribed by the State Transport Authority (STA), Odisha. It also alleged that the associations required truck owners to register their vehicles with them before operating in the region and prevented independent transporters from transporting raw materials from mines.

After finding a prima facie case, the Commission directed the Director General (DG) to investigate. The DG examined freight rate charts, resolutions, correspondence, and statements of office-bearers of the associations.

The investigation found that the associations had repeatedly revised freight rates on their own and charged rates substantially higher than those notified by the STA. On some routes, the difference exceeded 500%. The DG also found that independent transporters could not freely operate unless they were registered with the associations.

Agreeing with the DG's findings, the Commission held that the evidence on record, including freight rate charts, circulars, resolutions and admissions by the associations, showed that freight rates were being fixed through meetings, joint deliberations and coordinated decisions among the associations.

Rejecting the associations' defence that there was no formal agreement, the Commission observed:

“The Commission is of the view that the absence of a formal agreement or strict uniformity does not preclude a finding of contravention under Section 3(3) of the Act. The material on record sufficiently establishes a concerted practice by the OPs aimed at determining freight rates.”

The Commission also found that the associations restricted market access by requiring registration and excluding non-members from transporting minerals from mines.

Holding that such conduct limited competition in the transportation market, the Commission ruled,

“The Commission holds that the conduct of the OPs of not allowing any independent transporter to transport raw materials from the mines amounts to limiting and controlling the market for provision of transportation services.”

However, the Commission rejected the allegation that the associations had restricted the use of higher-capacity vehicles, finding insufficient evidence of any agreement or concerted practice on that issue.

The Commission directed the associations to cease and desist from the anti-competitive conduct and held their office-bearers liable under Section 48 of the Act. The question of monetary penalties will be decided separately after the associations and their office-bearers furnish the financial details sought by the Commission.