CCI Holds Two Textile Firms Guilty Of Bid Rigging In Defence Undergarment Tender
Pranav B Prem
The Competition Commission of India (CCI) has found textile manufacturers KKK Mills and Sankeshwar Synthetics Pvt. Ltd. guilty of bid rigging in a defence procurement tender for woollen underpants floated by the Directorate General of Ordnance Services (DGOS). The Commission held that the firms had indulged in collusive bidding in violation of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002, which prohibit anti-competitive agreements and bid rigging. The order was passed by a coram comprising Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad and Deepak Anurag in a reference initiated under Section 19(1)(b) of the Act by the CP Cell of the Master General of Ordnance Branch.
The case arose from a tender issued in July 2019 for procurement of woollen underpants, in which both KKK Mills and Sankeshwar Synthetics quoted an identical price of ₹127.90 per unit. Suspecting cartelisation, the DGOS cancelled the tender and floated a re-tender in November 2020. In the re-tender as well, both firms again quoted the exact same rate of ₹122.75 per unit, prompting a formal investigation.
The CCI noted that quoting identical prices up to two decimal points in two separate tenders, more than a year apart, gave rise to a strong presumption of collusion. A detailed investigation was carried out by the Director General, who examined bid data, email communications, call data records, and business linkages between the parties.
The Commission observed that the firms not only quoted identical prices but also submitted their bids within minutes of each other in both tenders, and that these were not last-minute submissions but were made well before the closing deadlines. The Commission held that such synchronised conduct went beyond mere price parallelism.
Rejecting the defence that the market was an oligopsony with the Ministry of Defence as the sole buyer, the CCI held that the firms had access to multiple government and private buyers and could not justify identical pricing on that basis. The Commission also rejected the argument that identical pricing was a coincidence due to similar raw material costs, noting that no independent pricing calculations were produced by either firm.
The investigation further revealed extensive communication between the firms, including through related entities, prior to and after bid submission. The Commission relied on evidence such as emails, call records and business linkages to conclude that the firms had pre-arranged prices and coordinated their participation in government tenders. It also noted a broader pattern of collusive conduct in other tenders, including sharing of rates and allocation of supply orders.
The Commission held that “there are other plus factors apart from price parallelism… which indicate that the OPs have engaged in bid rigging/collusive bidding,” and concluded that the conduct resulted in an appreciable adverse effect on competition.
The CCI also held Vikas Gupta, Partner of KKK Mills, and Anuj Jain, Director of Sankeshwar Synthetics Pvt. Ltd., liable under Section 48 of the Act, observing that both individuals were actively involved in the conduct of the companies’ business and had full knowledge of the tendering process. The Commission found that the individuals had participated in and facilitated the anti-competitive conduct.
On the issue of penalty, the Commission took note of the firms’ submissions that they were MSMEs, that the tender had ultimately been cancelled, and that no income had been derived from the impugned conduct. It also noted the difficulty in determining relevant turnover attributable to the infringing activity.
Taking a holistic view, the CCI chose not to impose any monetary penalty. Instead, it directed the firms and the concerned individuals to cease and desist from engaging in any such anti-competitive practices in the future. The Commission cautioned that any recurrence of such conduct would be treated as recidivism and would invite aggravated consequences. Accordingly, the CCI held KKK Mills and Sankeshwar Synthetics Pvt. Ltd., along with their responsible individuals, guilty of bid rigging in contravention of the Competition Act and disposed of the proceedings by issuing cease-and-desist directions under Section 27(a) of the Act.
Appearance
For CP Cell, Directorate General Ordnance Service: Harikesh Pratap
For KKK Mills: Advocates Utsav Mukherjee, Bhaskar and Vikas Gupta
For Sankeshwar Synthetics Pvt Ltd: Advocates Pulkit Agarwal, Anas Chaudhary and Anuj Jain
Cause Title: In Re: CP Cell, Master General of Ordnance Service v. M/s KKK Mills & Anr.
Case Number: Ref. Case No. 01 of 2021
Coram: Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad , Deepak Anurag
