Bid Rigging in Electrification Tenders by Assam Police Housing Corporation

Suo-Motu Case No. 03 of 2021 Page 1 of 39

COMPETITION COMMISSION OF INDIA

Suo-Motu Case No. 03/2021

In Re: Alleged bid rigging in Tenders invited by Assam Police Housing Corporation Limited for “Internal and External Electrification works in Police Station Buildings” across the State of Assam.

M/s Purbanchal Enterprise Opposite Party No.1 M/s Kalita Electric Works Opposite Party No.2 M/s Ramani Enterprise Opposite Party No.3 M/s D.B. Electricals Opposite Party No.4 M/s Horizon Enterprise Opposite Party No.5 M/s Deys Electric Opposite Party No.6 M/s Sri Krishna Electricals Opposite Party No.7 M/s Satyajit Electricals Opposite Party No.8 M/s R.M. Electricals Opposite Party No.9 M/s Choudhury Engineering Works Opposite Party No.10 M/s Sarmah Electricals Opposite Party No.11 M/s B.N. Enterprise Opposite Party No.12 M/s G.B. Enterprise Opposite Party No.13 M/s Assam Engineering Electrical Construction Opposite Party No.14 M/s Dee Dees Brilliance Opposite Party No.15 M/s Ganesh Electricals Opposite Party No.16 M/s Kamakhya Electricals Opposite Party No.17

Suo-Motu Case No. 03 of 2021 Page 2 of 39

Appearance on behalf of the Opposite Parties

Suo-Motu Case No. 03 of 2021 Page 3 of 39 CORAM Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Order under Section 27 of the Competition Act, 2002

1. The present matter arose out of a complaint dated 10.08.2020 from the Office of the Accountant General (Audit), Assam, alleging bid rigging in tenders floated by the Assam Police Housing Corporation Limited (‘APHCL’) for ‘Internal and External Electrification Works in the Police Station Buildings’ (‘Impugned Tenders’) under Mission of Overall Improvement of Thana for Responsive Image (‘MOITRI’) Scheme of Government of Assam (‘GoA’) across the State of Assam.

2. APHCL, established in 1980 as a State Public Sector Undertaking, functions under the administrative control of the Home and Political Department, GoA, and is stated to be engaged in the construction of police stations, barracks, residential quarters complex, etc., for the State Police Forces.

3. The MOITRI Scheme was launched by GoA in July, 2016 with the aim of developing physical infrastructure in 345 Police Stations (‘P.S.’) in the State over a period of five years (2017-2022) to make them more citizen friendly. APHCL floated separate tenders for civil and electrical works for each of the identified 73 PS under the said scheme. The tenders for civil works were floated between February, 2017 and March, 2018 and the work was awarded by April, 2018 at a total cost of Rs. 97.36 crore. The tenders for electrical works were floated between January and March, 2018 and work was awarded by April, 2018 at a total cost of Rs. 37.40 crore.

Suo-Motu Case No. 03 of 2021 Page 4 of 39 4. The Office of the Accountant General (Audit), Assam, conducted an audit of implementation of the MOITRI Scheme. Based on such audit, the Accountant General (Audit) was of the opinion that bid rigging took place in the Impugned Tenders, which led to higher cost of procurement by atleast Rs. 7.56 crore. It was mentioned in the complaint that the Impugned Tenders were rigged by 17 approved vendors of APHCL which are the Opposite Parties (‘OPs’) in the present matter. Notice inviting the tenders for the MOITRI Scheme was launched in two stages, initially, from 19.01.2018 (last date of bid submission was on 29.01.2018 for 39 P.S.) and the second phase on 27.03.2018 (last date for submission was on 06.04.2018 for 34 P.S.). The audit also provided detailed observations on how bid rigging took place in the aforesaid tenders.

Prima facie order of the Commission under Section 26 (1) of the Act dated 21.10.2021

5. On examination of the complaint filed by the Office of Accountant General (Audit), Assam, the Commission deemed it appropriate to take up the matter Suo-Motu. The 17 OPs in the present case are the suppliers of electrical equipment and related work.

6. The Commission, based on the averments contained in the complaint noted that the bidders managed to secure all bid positions i.e. L-1, L-2 and L-3 in different bids by quoting different prices for the same items. Further, 16 out of a total of 17 bidders, won at least one tender. Also, L-1 bids of 16 bidders had been placed within a very narrow range which indicated pre-determined behaviour of the bidders.

7. The Commission further noted that, for standard Schedule of Rates (‘SOR’) Items, when bidders emerged as L-1, they quoted the same rate as mentioned in Assam Public Works Department (‘APWD’) SOR. For non-SOR items (where the rates had been estimated by the consultants), L-1 bidders quoted exactly the same rate as had been estimated by the consultants. The Commission further noted that errors made by the consultants while preparing estimates were blatantly replicated by the bidders in bid submissions. There was also numerical similarity/pattern in the bids of L-2 and L-3 vis-a-vis L-1, wherein L-2 and L-3 bid rates differed by a single digit from the L-1 rate, leading to a gap of Rs. 10/- to Rs. 100/-, or its multiples. The same public IP address was used to submit bids by various bidders, indicating use of the same computer

Suo-Motu Case No. 03 of 2021 Page 5 of 39 system. Based on the above, the Commission observed that, prima facie, there appeared to be meeting of minds amongst the 17 bidders, and these bidders seemed to have manipulated the bidding process in the Impugned Tenders by indulging in bid- rigging, more particularly, by adopting cover bidding and bid rotation, thereby, reducing the competitive intensity of the entire bidding process.

8. Accordingly, the Commission was prima facie of the view that a case of contravention of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002 (‘Act’) was made out against the OPs. Vide order dated 21.10.2021, the Commission directed the Director General (‘DG’) to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The DG was also directed to investigate the role of the persons/officers who were in charge of, and were responsible for the conduct of the activities of such entities, that may be found to have indulged in anti-competitive conduct, at the time the alleged contravention was committed as well as persons/officers with whose consent or connivance the alleged contravention was committed, in terms of the provisions of Section 48 of the Act.