Competition Commission of India (CCI), the body responsible to prevent activities like collusive bidding that have an adverse effect on competition in India, recently slapped a fine of Rs 317.91 crores on three Aluminum Phosphide Tablets manufacturers including a fine of Rs 252.44 crore on United Phosphorus (UPL).
Aluminum phosphide tablets are used for storing food grains by FCI. The action was taken by CCI after FCI chairman and managing director wrote a letter to the commission in February 2011, drawing attention towards rise in cost of procurement due to anticompetitive agreement among the manufacturers of aluminum phosphide in the tender of FCI and requesting the commission to make inquiries.
These three companies had participated in the tender floated by FCI and submitted the bids on the same day by quoting the same rate even though there was difference in cost of production. There was a clear case of collusive bidding as by quoting identical prices, they deprived FCI the benefit of choosing from competitive bid rates in procurement of these tablets.
The commission has decided to impose this penalty at a rate of 9% of the average turnover of these companies in last three years. The other two companies Excel Crop Care and Sandhya Organics Chemical were fined Rs 63.90 crore and Rs 1.57 crore respectively.
For an update on a previous instance when CCI came down harshly on anti-competitive practices, see CCI’s Order in DLF case.