State run giants take the lead in exposing collusive bidding

Hello everyone I’m Anshuman’s latest (and first J) recruit to contribute to this blog along with him.

The first thing that struck me when he asked me to write about new developments in Indian competition law was the spate of bid rigging cases done by the Competition Commission of India (CCI) recently (Aluminum Phosphide Tablets, Coal blasters and LPG cylinder manufacturers). One common thread running through all 3 cases was that the complainant was a public sector giant (Food Corporation of India, Coal India and Indian Oil respectively). Thus garnering evidence about the bidding practices of the parties should not have been too much of a problem for the CCI . That however does not take away from that fact that these cartel cases and the substantial fines imposed therein have certainly gone a long way in silencing critics who claimed that the CCI hadn’t done enough to punish the most serious infringements of competition law i.e cartels.

But it is important to bear in mind here that competition law is a double edged sword for these state run entities many of which hold very strong positions on their respective markets due to state support.  It may well be the case that these state run entities are using their substantial market power (an economist’s way of saying ‘dominance’) to indulge in exploitative/exclusionary practices. In fact the very same explosive manufacturers who have been fined for cartelization filed a case against Coal India last year for abuse of dominance but the case failed due to lack of evidence. Of course as all good lawyers would say, it all comes to evidence in the end, but as a general thought, the CCI may be well advised in future to look at practices of state run entities with more suspicion particularly since such markets are already distorted due to state intervention.