The Competition Commission of India held that the OMCs did not violate provisions of competition act for issuing joint tender for procurement of Ethanol.
The Commission noted that EBP was started by the Government of India in 2002-03. The Ministry of Petroleum and Natural Gas (‘MoPNG’) made 5% Ethanol blending in petrol mandatory across 9 States and 5 Union Territories (‘UTs’). However, the same could only be partially implemented because of unavailability of Ethanol.
It was further observed that as per the terms and conditions of the Impugned Tender, the award of tender was to be made on depot-wise basis as per the lowest NDC quoted. The one who had quoted the lowest NDC amongst all bidders for a particular location was to be declared L1 and was to be called for negotiations by the OMCs.
As far as OP-4, OP-5 and OP-6 (OMCs) are concerned, the DG has concluded that “the investigation has, therefore, not found any violation of provisions of Competition Act by OMCs in issuing a joint tender for procurement of Ethanol”. In this regard, the Commission noted from the investigation report that all the three PSU OMCs are directly controlled by the MoPNG, Government of India and they are obligated to act according to direction(s) of the Ministry.
The bench observed that there has been no attempt by the OMCs to determine, directly or indirectly, the price of Ethanol, or to limit or restrict, the supply of Ethanol. Further, total quantity of Ethanol that is required by the OMCs is well known, since it arises from gazette notification and will not change whether a single tender or separate tenders are issued.
The commission held that issuance of joint tender purely on account of commercial and operational considerations and to meet the Government’s directives in a cost effective manner, cannot be construed to be anti-competitive or in violation of the provisions of Section 3(3) of the Act.
The bench concluded that the investigation has not brought out sufficient evidence on record for the Commission to arrive at a finding of contravention of the provisions of the Act against any OP in the present matters.
Facts
In 2013, separate Informations under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’), were filed.
Post Central Government notification dated 02.01.2013 mandating all OMCs to sell Ethanol blended Petrol (‘EBP’) to achieve 5% Ethanol blending across the country, a joint tender dated 02.01.2013 (‘Impugned Tender’) was issued by the above-mentioned three PSU OMCs for procurement of ‘Ethanol’, which is a by-product of sugar production. In the captioned matters, allegations pertain to price fixation and bid-rigging by various sugar mills, most of whom are members of the above-mentioned three associations, in the Impugned Tender were made. Other allegations in the nature of, inter alia, the sugar mills limiting the production of Ethanol to create artificial scarcity in the market were also levelled and it was also averred that joint tendering by the OMCs itself is anti-competitive.
Case Information
Case Name : India Glycols Ltd. v/s Indian Sugar Mills Association
Judicial Level & Location : Competition Commission of India
Appeal Number :Case No. 21 of 2013
Date of Ruling : 2024-07-22
Ruling in favour of: Respondent
Judges: Ms. Ravneet Kaur Chairperson, Mr. Anil Agrawal Member, Ms. Sweta Kakkad Member, Mr. Deepak Anurag Member
