Case Overview:
The order pertains to an investigation initiated by an informant (whose identity is kept confidential) against HP India Sales Private Limited and several of its resellers. The core allegation is bid-rigging in tenders floated on the Government e-Marketplace (GeM) by the Gurugram Metropolitan Development Authority (GMDA) and the Faridabad Metropolitan Development Authority (FMDA). The CCI ultimately closed the case, finding no prima facie evidence of a violation of Section 3 of the Competition Act, 2002.
1. Parties Involved:
a) Informant: Referred to as “XYZ” to maintain confidentiality. This is the party who filed the complaint with the CCI alleging anti-competitive behavior.
b) Opposite Parties (OPs):These are the parties against whom the allegations are made.
- OP-1: HP India Sales Pvt. Ltd: The Indian subsidiary of HP, a major manufacturer of printers and related products. It’s included because the allegation is that it was involved in or facilitated the alleged bid-rigging.
- OP-2: Wideprint Systems and Solutions: A reseller of HP products. The Informant highlights that this party won several of the tenders in question.
- OP-3: Digital Global: Another reseller involved in the bidding process.
- OP-4: Capricot Technologies Pvt. Ltd: A reseller in the bidding process.
- OP-5: Samman Consultants: Reseller in the bidding process.
- OP-6: Sigma eSolutions Pvt. Ltd: Reseller in the bidding process.
- OP-7: Transcon Electronics Pvt Ltd: Reseller in the bidding process.
- OP-8: KR Enterprises: A reseller in the bidding process.
2. Allegations:
a) Core Claim: Bid-Rigging: The central accusation is that HP India and its network of resellers colluded to manipulate the bidding process in the GMDA and FMDA tenders. This falls under the purview of Section 3 of the Competition Act, which prohibits anti-competitive agreements, including cartels.
b) Tenders in Question:
- GMDA Tender:(GEM/2024/B/4889227) A tender floated by the Gurugram Metropolitan Development Authority.
- FMDA Tender:(GEM/2024/b/5094056) A similar tender floated by the Faridabad Metropolitan Development Authority.
- Both tenders were for the procurement of inkjet/LED A0-A4 size plotter/printer, and the specification included a 5-year extended warranty covering key components like the print head and maintenance box.
3. Specific Points Raised by the Informant:
- Circumstantial Evidence: The Informant claimed that the similarities in the bidding patterns, product offerings, and warranty terms across the OPs indicated a coordinated effort to rig the bids.
- Exclusion of Competitors: The Informant suggested that the tender specifications were designed to exclude other major printer manufacturers (Canon and Epson), effectively favoring HP and its resellers.
- BHEL Tender Comparison: The Informant used a tender from Bharat Heavy Electricals Limited (BHEL) as a benchmark. They argued that the same product was quoted at a lower price in the BHEL tender, suggesting overpricing in the GMDA and FMDA tenders.
- Component Pricing Discrepancy: The Informant alleged that the total price of individual components (printer, cartridges, warranty, etc.) should have been lower than the final bid price, suggesting inflated prices in the tenders.
- Warranty Collusion (GMDA): The Informant highlighted that all five bidders in the GMDA tender quoted for a 5-year warranty, even though the tender only specified a minimum of three years. This uniformity was presented as evidence of collusion.
- OEM vs. Reseller Bidding (FMDA): In the FMDA tender, Digital Global (OP-3) bid with a ROWE brand product (OP-2 being the deemed OEM) and OP-2 itself quoted an HP product. The Informant argued that this implied that OP-2 authorized a reseller to bid against itself, which is suspicious.
4. CCI Analysis and Findings:
- BHEL Tender: The CCI found that the BHEL tender was for leasing mono LED/inkjet plotter printers, whereas the GMDA and FMDA tenders were for purchasing multifunction color inkjet plotter printers, rendering it incomparable.
- GMDA Tender: The CCI noted that the GMDA tender explicitly required “Onsite OEM Warranty – 5 years.” Therefore, the fact that all bidders quoted a five-year warranty was not evidence of collusion but a direct response to the tender’s requirements.
- FMDA Tender: The CCI determined that there was no bidding against itself as both Digital Global (OP-3) and Wideprint System and Solutions (OP-2) were quoting from different OEMs as per their own preferences.
- Restrictive Specifications & Component Pricing: The CCI upheld the procurers’ right to specify product requirements, warranty conditions, and pricing structures. It emphasized that the CCI should not dictate these terms to the procurer. Additionally, the Informant failed to provide sufficient evidence to support the claim that the cumulative price for individual components was lower than the composite bid prices.
5. CCI Decision:
- No Prima Facie Case: Based on its analysis, the CCI concluded that there was no prima facie evidence to support the allegations of cartelization or any violation of Section 3 of the Competition Act.
- Closure of the Case: As a result, the CCI closed the case under Section 26(2) of the Act, meaning it did not warrant a full investigation.
6. Confidentiality:
Informant Protection: The CCI granted the Informant confidentiality over their identity and contact details for three years, in accordance with Regulation 36(1) of the Competition Commission of India (General) Regulations, 2024. This is a standard practice to encourage individuals to report potential anti-competitive conduct without fear of reprisal.
7. Conclusion:
This order represents a situation where allegations of bid-rigging were made, but the CCI, upon initial review, found insufficient evidence to warrant a full investigation. The case highlights the CCI’s role in reviewing tenders and bidding processes to ensure fair competition but also emphasizes that the CCI will not interfere with the legitimate rights of procurers to specify their requirements. The order also showcases how the CCI considers circumstantial evidence and compares tenders but relies on concrete evidence.
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