Bid Rigging in Procurement of Underpant Woollen · Ref. Case No. 01 of 2021

Ref. Case No.01 of 2021 Page 1 of 25 COMPETITION COMMISSION OF INDIA Ref. Case No. 01 of 2021

In Re:

CP Cell, Master General of Ordnance Service, Informant Directorate General Ordnance Service, CP Cell/ OS Dte, Room No. 101, D-II Wing 1st Floor, Sena Bhawan, New Delhi-110001

And

M/s KKK Mills, Opposite Party No.1 B-40, Phase V, Focal Point, Ludhiana-141010

M/s Sankeshwar Synthetics Pvt. Ltd., Opposite Party No.2 239, Oswal Road,

Industrial Area- A, Ludhiana-141003

CORAM

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Ref. Case No.01 of 2021 Page 2 of 25 Present:

CP Cell, Directorate General Ordnance Service Harikesh Pratap Singh GSO1/OS/CN On behalf of Union of India M/s KKK Mills Utsav Mukherjee, Advocate Bhaskar, Advocate Vikas Gupta, Partner M/s Sankeshwar Synthetics Pvt. Ltd. Pulkit Agarwal, Advocate Md. Anas Chaudhary, Advocate Anuj Jain, Partner

Order under Section 27 of the Competition Act, 2002

Brief Facts of the Case

1. The present matter was initiated based on a Reference from CP Cell, Master General of Ordnance Branch, Directorate General of Ordnance Services, (‘DGOS’/‘Informant’) by the Competition Commission of India (‘Commission’) under the provisions of Section 19(1)(b) of the Competition Act, 2002 (‘Act’). The Reference alleged that M/s KKK Mills (‘OP-1’) and M/s Sankeshwar Synthetics Pvt. Ltd. (‘OP-2’) entered into an agreement resulting in collusive bidding in the tender for procurement of Underpant Woollen, thereby violating the provisions of Section 3(3)(d) read with Section 3(1) of the Act. OP- 1 and OP-2 are hereinafter referred to as the Opposite Parties (‘OPs’).

2. OP-1 is a partnership firm having its registered office at Ludhiana, Punjab. Shri Kamal Kant Gupta, Shri Naresh Kumar Gupta, Shri Vikas Gupta and Shri Atul Gupta are partners of the firm. OP-1 is engaged in manufacturing of textile items such as socks, jerseys, caps, gloves, woollen underpants, vests, blankets, shirting angola (cloth for shirt) and serge cloth.

3. OP-2 is a private limited company, incorporated on 20.02.1991 under the provisions of the Companies Act, 1956, having its registered office at Ludhiana, Punjab and corporate identification number as U17115PB1991PTC011107. It is engaged in the business of manufacturing of fabric as well as trading of yarn and raw wool.

Ref. Case No.01 of 2021 Page 3 of 25

4. As per the Reference, this matter related to the re-tender for procurement of Underpant Woollen. The re-tender was done as the initial tender dated 11.07.2019, had been cancelled by the Informant due to suspicion of cartelization by the OPs, with both OP-1 and OP-2 quoting the exact same price i.e., Rs. 127.90/- for the tendered item.

5. It was stated that the Informant, after cancelling the initial tender, had again issued a Request for Proposal for re-tendering and conclusion of the Rate Contract (‘RC’) to procure Underpant Woollen. In the re-tender, 15 firms participated, but only 9 firms qualified for opening of financial/commercial bids. After opening the financial/commercial bids of the re-tender, the Informant found that both the OPs, who were declared as L-1, had again quoted identical rates i.e., Rs.122.75/- for the tendered item.

Prima facie order of the Commission passed under Section 26(1) of the Act

6. The Commission noted that both the OPs had quoted identical rates (up to two decimal points), both in the initial tender of 2019 i.e. Rs.127.90/- and in the re- tender of 2020-21 i.e. Rs.122.75/-. The Commission also noted that in the re- tender, the rates were lower than the ones quoted in the initial tender.

7. The Commission examined the submissions made in the Reference and noted that the Informant had highlighted the existence of price parallelism in the bids submitted by the OPs both in the initial tender of 2019 and the re-tender of 2020- 21 for the same tendered item. In this regard, the Commission noted that the fact that both the OPs had quoted identical rates (till the last two decimal points) in 2 separate tenders, gave rise to a strong suspicion that the OPs may have had some prior understanding amongst themselves with respect to the rates quoted in their bids and that the quotes appeared to have not been independently made by the OPs in response to the tenders.

8. Accordingly, the Commission vide its order dated 03.12.2021 passed under Section 26(1) of the Act, formed a prima facie view that a case of contravention

Ref. Case No.01 of 2021 Page 4 of 25 under Section 3 of the Act was made out against the OPs and directed the Director General (‘DG’) to investigate the matter.

Investigation by the DG

9. The DG, pursuant to the directions of the Commission in the prima facie order, investigated the matter, and after seeking due extensions of time, submitted the Investigation Report dated 20.06.2024, in both confidential and non-confidential versions.

Issues for Investigation and Findings of the DG

Issue (i) Whether the OPs have entered into an agreement for directly or indirectly engaging in bid rigging/collusive bidding, thereby violating the provisions of Section 3 of the Act?

10. During investigation, the DG noted that the Impugned Tender was advertised on 12.11.2020 bearing Tender No. A/60186/Dept RC/Underpant Woollen/DGOS/OS-PIII/Proc Sec. This tender was cancelled by the Informant due to suspicion of cartelization.

Evidence collected and analysed under Section 3 of the Act

11. Regarding the quoting of identical price by the OPs, the DG found that the Informant had earlier floated a tender for procurement of Underpant Woollen on 11.07.2019 bearing Tender No. A/60117/Dept RC/Underpant Woollen/DG OS/OS-PII/Proc Sec. In the said tender, the OPs quoted exact same rate (up to two decimal points) i.e. Rs. 127.90/-. Due to suspicion of cartelization, the said tender was cancelled by the Informant. Thereafter, re-tender was done on 12.11.2020 for procurement of Underpant Woollen. In the re-tender as well, the OPs quoted identical rates (up to two decimal points) i.e. Rs. 122.75/-. The DG submitted that not only does this appear to be price parallelism, the fact that the OPs had quoted identical rates (up to two decimal points) in 2 separate tenders, cannot be ignored.

Ref. Case No.01 of 2021 Page 5 of 25 12. In this regard, officials of the OPs were confronted by the DG for quoting identical prices in both the tenders. These officials took the position that identical quotation of rates was a coincidence. Shri Anuj Jain, Director of OP-2 further stated that the cost of raw materials and manufacturing is almost equal for everyone.

13. Considering the above submissions and failure on the part of the OPs to provide any plausible explanation for their conduct, the DG observed that identical price up to two decimal points could not have been quoted without some type of agreement/arrangement between the OPs. In absence of any market condition and other factors which would lead the OPs to quote identical rates, the DG concluded that in the present case, the OPs mutually decided the rates to be quoted by them for becoming L-1 bidders.

14. The DG also found that there was a small time difference in the submission of financial/commercial bid in both the tenders by the OPs. When confronted by the DG on this aspect, Shri Vikas Gupta, Partner of OP-1 stated that re-tender was submitted 3 or 4 times by them to verify whether correct documents were attached or not. Shri Anuj Jain Director of OP-2, stated that as no decision was made about the rates, no cartel had been formed.

15. With regard to contact/relation between the OPs, the DG found evidence which shows that the OPs have been in contact with each other prior to the tendering process with respect to the Impugned Tender. The Investigation Report draws attention to the relation of OP-2 with another firm, i.e., M/s Jainson Hosiery Industries (‘JHI’), which has actively engaged in communications with OP-1 and Shri Anuj Jain.

16. The DG also found the partnership deed of JHI. As per the deed, Shri Arun Jain, father of Shri Anuj Jain, is a partner of JHI. Shri Anuj Jain stated on oath that JHI is not related to OP-2 in any manner and he does not know the partners of JHI. However, he admitted that Shri Satpal Jain was a Director of OP-2 and as per the partnership deed, Shri Satpal Jain was also a partner of JHI. The DG concluded that contrary to the submissions made by Shri Anuj Jain, OP-2 and JHI are related parties.

Ref. Case No.01 of 2021 Page 6 of 25

17. During the course of investigation, notices were issued to Bharti Airtel and Reliance Jio Infocomm, in order to gather Call Data Records (‘CDR’) information/data of the OPs and their associated persons. The DG found evidence in form of CDR, emails and bank transactions which further indicates that the OPs were regularly in touch with each other both prior as well as after submission of the financial/commercial bid. Moreover, the emails between OP-1, OP-2 and JHI show that the OPs repeatedly discussed various tenders with each other.

18. The DG also submitted that the conduct of the OPs in other tenders including fixing rates, dividing supply orders, and maintaining consistent patterns of cooperation further reinforces the conclusion that their behaviour was not coincidental or market driven. Instead, it reflects a deliberate and sustained effort to manipulate bidding outcomes, thereby restricting competition and potentially causing harm to the procuring entities and public interest.

19. The DG further submitted that in other tenders, emails dated 19.08.2020, 16.09.2020, 06.10.2020, 10.10.2020, 28.07.2021 and 18.08.2021, were also exchanged between the OPs and other bidders. A perusal of the emails show that the bidders frequently contacted one another for deciding who will win various tenders and thereafter, the profits from the tenders were distributed between the bidders by sharing the supply orders equally. Relying on the emails, the DG submitted that the OPs were engaged in mutually deciding the rates to be quoted by them in various tenders which indicates pattern of collusive behaviour on their part.

20. On the basis of the foregoing, the DG concluded that the OPs have engaged in bid rigging by entering into an agreement in violation of Section 3(3) of the Act, thereby causing Appreciable Adverse Effect on Competition (‘AAEC’).

Issue (ii) if violation of the provisions of the Act by any of the OPs is found, who is/are the individuals held responsible under Section 48 of the Act?

21. The DG found the following individuals liable under the provisions of Section 48 of the Act:

Ref. Case No.01 of 2021 Page 7 of 25 i. Shri Vikas Gupta, Partner of OP-1 ii. Shri Anuj Jain, Director of OP-2

22. The DG noted that Shri Vikas Gupta was actively involved in the affairs of the company and was handling the email address kkkmills@ymail.com which was actively used for discussing various tenders with OP-2 and other bidders. In this regard, few emails sent by OP-1 dated 14.07.2021, 07.07.2021 and 24.07.2021 were referred to by the DG.

23. It was noted by the DG that emails retrieved from the account of kkkmills@ymail.com exchanged with vinodjain_2009@yahoo.in (owned and handled by Shri Anuj Jain) could not be found in the email communications provided by Yahoo India. This showed that all relevant emails and most of the communications with kkkmills@ymail.com were deleted by Shri Anuj Jain and that an attempt was made by Shri Anuj Jain to hide evidence from the DG.

24. In his statement on oath, Shri Anuj Jain stated that after the death of Shri Satpal Jain, he started managing the business as well as the aforementioned email address in 2021. However, the evidence suggests that Shri Anuj Jain was managing the email address, prior to submission of bid in the Impugned Tender. The DG further noted that Shri Anuj Jain has made false statement on oath regarding OP-2’s relation with JHI and OP-1.

Consideration of the Investigation Report by the Commission

25. The Commission considered the Investigation Report in its ordinary meeting held on 02.08.2024 and directed to forward a copy of the non-confidential version of Investigation Report to the Informant, the OPs and their individuals held liable by the DG under Section 48 of the Act. In terms of the Commission’s orders dated 02.08.2024, 25.09.2024 and 13.11.2024, the OPs filed their objections/suggestions to the Investigation Report along with their financial details.

26. On 20.08.2025, the Commission heard the Informant, the OPs and their individuals in terms of Section 35 of the Act and directed them to file their written

Ref. Case No.01 of 2021 Page 8 of 25 submissions. OP-1 submitted its written submissions dated 04.09.2025 on 12.09.2025 and OP-2’s written submissions dated 03.09.2025 were filed on 03.10.2025.

Objections/ Submissions of the OPs

27. A summary of replies/objections/written submissions to the Investigation Report filed by OP-1 and its individual are as under:

i. The Impugned Tender is a re-issuance of the earlier tender of 2019 as the same was cancelled. As far as the present Impugned Tender is concerned, the grounds for levelling the charges of bid rigging/collusion against the OPs are more or less the same as the ones levelled in Ref. Case No. 01 of 2020 in which the Commission vide order dated 20.05.2021, passed under Section 26(2) of the Act observed that “mere existence of price parallelism or identical prices is not per se sufficient to hold parties liable for bid rigging.” Considering that the issue on the basis of which the present conclusion of bid rigging in the Impugned Tender has been arrived at has already been dismissed previously by the Commission, the present report is not maintainable at the outset.

ii. During investigation, the DG reviewed the email accounts and call records of both the OPs. However, no evidence of collusion or agreement in respect of either of the tenders was produced. Further, the Impugned Tender was not cancelled owing to any conduct of OP-1 or any cartel arrangement as alleged and there is no AAEC by the conduct of OP-1.

iii. The Impugned Tender was in the nature of a RC, which means that the RC Concluding Authority reserved the right to carry out negotiation with more than 1 Capacity Verification (‘CV’) compliant firms whose rate fall within a range of 15% of the L-1 rate. A RC is in the nature of a standing offer and a legal contract comes into being only when a supply order is placed at the negotiated/L-1 rate by the Competent Finance Authority. No entity can derive any advantage by bid rigging or collusion of any nature as the rate on which the tender would eventually be awarded and the entity to which it is awarded is not dependent on the bid submitted