Cartelisation: Competition Comm directs 8 MSMEs to cease, desist from unfair biz practices

Competition Commission on Tuesday directed eight MSMEs to desist from unfair business practices after finding them indulging in bid-rigging and cartelization.

The case, which pertained to the supply of axle bearings to Eastern Railway, was taken up by the regulator based on a reference filed on behalf of the Eastern Railway.

The watchdog found the eight firms indulged in cartelization in the supply of axle bearings utilizing directly or indirectly determining prices, allocating tenders, coordinating bid prices, and manipulating the bidding process.

The Competition Commission of India (CCI) has directed the firms as well as their respective officials to cease indulging in such practices, a release said.

These firms are Chandra Brothers, Chandra Udyog, Sriguru Melters & Engineers, Rama Engineering Works, Krishna Engineering Works, Janardan Engineering Industries, V. K. Engineering Industries, and Jai Bharat Industries.

''The Commission holds that OP-1 to OP-8 has contravened the provisions of Section 3(1) of the Act read with Section 3(3),'' it said in an order.

OPs or Opposite Parties are the firms. The Act refers to the Competition Act, 2002, and Section 3 pertains to anti-competitive agreements.

In the order, the regulator noted that e-mails exchanged showed that the firms discussed quantity allocation concerning the tenders of Indian Railways for the procurement of axle bearings, amongst themselves. The vendors were also found to have discussed the compensation mechanism if some of them did not win the agreed quantities, it added.

However, CCI decided not to impose monetary penalties on the firms after taking into consideration certain aspects, including that the firms were MSMEs with limited staff and turnover. The cooperative and non-adversarial approaches adopted by the firms in acknowledging their involvement as well as the economic stress wrought upon the MSME sector in the wake of COVID were also taken into account while deciding against imposing penalties.

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