The Competition Commission of India (CCI) has recently imposed a hefty penalty on 51 liquified petroleum gas (LPG) cylinder vendors for indulging in cartelization in bidding process for supplying LGP cylinders to Hindustan Petroleum Corporation of India (HPCL) on 21st August, 2019. Also, further penalty was imposed on 48 vendors for contravening Section 48 of the Competition Act, 2002 as amended thereof (The Act), whereby the directors or persons in charge of the LPG companies were held liable for contravention of the said provisions of the Act.
The Commission took suo motu cognizance of this case upon receiving an anonymous letter alleging that a cartel was operating in a few tenders floated by HPCL for supplying LPG cylinders in 18 states across India. Thereafter, the CCI directed the Director General (DG) to conduct investigation in the said case.
Upon investigation, the DG made the following submissions in his report: –
- The price bid which were submitted by vendors showed a similarity pattern. Also, the vendors submitted the bid in close range where they have participated.
- Vendors were also part of the LPG manufacturers organization where they regularly met as it was common platform for them to meet and indulge in anti – competitive practices.
- Also, the investigation pointed that several vendors discussed among themselves before withdrawing their bids.
The LPG vendors defended themselves that in the current scenario there are only 3 buyers for 14.2 kg LPG cylinder namely Indian Oil Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Private Limited (HPCL) which gives them bargaining powers.
The CCI was of view that “the instant case emanates out of public procurement and as such it is a fit case to impose penalties upon the infringing parties”. Such anti – competitive practices in public sector directly affects the consumers as they end up paying higher costs. Moreover, LPG cylinders are an integral part of every household in India. Thus, CCI imposed penalty on all the vendors involved in the cartel, under Section 3 of the Act, i.e. penalty at the rate of 1 percent of their average turnover for the financial years 2013-14, 2014-2015 and 2015-16.
The Indian Lawyer