Mahesh N R And Bangalore Electricity Supply Company, M/s Rajashree Electrical Davangere, M/s VR Patil Vividh Vidyuth Nirman Pvt. Ltd. · Case No. 25 of 2025
CCI competition order Case No. 25 of 2025 · 25 Mar 2026
CCI competition order Case No. 25 of 2025 · 25 Mar 2026
Summary
Check the official recordThe Competition Commission of India (CCI) closed a case filed by an informant alleging bid-rigging and collusive tendering by Bangalore Electricity Supply Company (OP-1) and two service providers (OP-2 and OP-3) regarding a Smart Meter procurement tender. The informant claimed OP-1 violated the Karnataka Transparency in Public Procurement (KTPP) Act by tailoring tender conditions to favor OP-2 and OP-3, leading to inflated costs. The Commission found that the KTPP Act allows procurement entities to modify technical provisions, rendering the allegations of procedural deviation meritless. Furthermore, the Commission determined that the procurement costs were comparable to other states when accounting for variations in tender quantity and life cycle, and found no evidence of collusion or cartelization. Consequently, the case was closed under Section 26(2) of the Competition Act, 2002.
Key dates
Who is affected
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COMPETITION COMMISSION OF INDIA Case No. 25 of 2025
In Re: Mahesh N R
Informant And
Bangalore Electricity Supply Company
Opposite Party No.1 (OP-1) M/s Rajashree Electrical Davangere
Opposite Party No.2 (OP-2) M/s VR Patil Vividh Vidyuth Nirman Pvt. Ltd.
Opposite Party No.3 (OP-3)
CORAM
Ravneet Kaur Chairperson
Anil Agrawal Member
Sweta Kakkad Member
Deepak Anurag Member
Order under Section 26(2) of the Competition Act, 2002
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Vidyuth Nirman (‘Opposite Party No. 3’/ ‘OP-3’) (collectively referred as ‘OPs’), alleging contravention of Section 3 of the Competition Act, 2002 (‘the Act’) by way of a concerted and collusive arrangement resulting in bid rigging and exclusionary conduct in the public procurement process.
The Informant has stated that he is a consumer of OP-1, who will be forced to pay the Advance Metering Infrastructure (‘AMI’) Service Provider charges of Rs 75 per meter per month, once Smart Meters are installed in the jurisdiction of OP-1. This payment would be made to OPs in an allegedly rigged contract at higher prices and would burden the consumers with the price difference, leading to overpayment of several thousand crores.
OP-1, is an instrumentality of the State of Karnataka engaged in distribution of electricity, including retail supply, in the State. The distribution area of OP-1, comprises Bengaluru Urban, Bengaluru Rural, Chikkaballapura, Chitradurga, Davanagere, Kolar, Ramanagara and Tumakuru Districts.
OP-2, was established in 2009 as a proprietorship firm under the name, Rajashree Electricals-Davangere. It was reconstituted as a private limited company on 25.10.2023. The company undertakes turnkey engineering, procurement and construction (‘EPC’) projects to execute all types of electrical works pertaining to distribution and transmission such as cabling, metering, overheads and substations for Karnataka Power Transmission Corporation (‘KPTCL’).
OP-3, incorporated in 2013 by VR Patil, is engaged in the EPC businesses in Karnataka. It also has a 3-megawatt solar power plant.
The Informant has alleged that OP-1, being an instrumentality of the State of Karnataka, is statutorily obligated to adhere to the Karnataka Transparency in Public Procurement Act, 1999 (‘KТРР Act’) and the Rules framed thereunder, in all procurement processes involving goods, works, and services. Notwithstanding
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this mandate, OP-1, with malafide intent, has deliberately circumvented the provisions of the KTPP Act and the prescribed standard bidding procedures thereunder while issuing the tender floated for the procurement of four lakh Smart Meters per year in the jurisdiction of OP-1, for a period of five years and selection of AMI Service Provider across the State of Karnataka for a period of 10 years.
The Informant has alleged that the tender in question was structured in a manner that was not only non-compliant with the statutory framework but was also designed to unduly favour OP-2. The eligibility conditions were tailor-made to ensure that no entity other than OP-2, and its proxy or allied bidder OP-3, could qualify. It is submitted that both the aforementioned entities were acting in concert, under the aegis of OP-1, to restrict entry and manipulate the bidding process.
The Informant has alleged that, there is a pattern of the two bidders i.e., OP-2 and OP-3 carrying out similar practices previously with OP-1. This concerted conduct allegedly constitutes a case of bid-rigging and collusive tendering, falling within the meaning of Section 3(3)(d) of the Act. The impugned actions have led to the appreciable effect of eliminating effective competition, inflating procurement costs (by nearly 100% as compared to similar tenders floated in other States), and causing substantial harm to consumer interest and public funds. Moreover, the actions of OP-1 are not only violative of the statutory obligations under the KTPP Act but also amount to facilitation and active participation in the cartel, and attracting liability under Section 3(1) of the Act for facilitating and implementing an anti-competitive agreement.
The Informant has mainly relied on four major grounds for breach of the Act, which are as follows: a. Deviation from the mandatory procurement framework by OP 1 The Informant has alleged that there was deliberate deviation by OP-1, from the mandatory procurement framework under the KTPP Act, and the Standard Tender Documents (Works Format-4) prescribed by the
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Government of Karnataka. It is alleged that deviations were not inadvertent but were consciously designed, in concert with OP-2 and OP-3 to foreclose competition. The Informant has stated that contrary to the Works Format-4 (Clause 3.2 d), which permits bidders to rely on the technical credentials and experience of their identified sub-contractors to meet eligibility requirements such as the sub-contractor having the State Government License or having completed 50% of the tender value; the OP-1 tender explicitly disallowed such reliance. The Informant has further alleged that in case of Smart Meter based Information Technology/Telecommunication related experience, the credentials of the sub-contractor were allowed to meet the qualifying criteria of the bidder for the tender. This inclusion/allowance of sub-contractor credentials to meet qualifying requirements for the tender were consciously designed as OP-2 and OP-3 did not have Smart Meter experience.
b. Arbitrary Technical Qualification linked to Prior Execution in Electricity Supply Company (‘ESCOM’)/ Electricity Distribution Company (‘DISCOM’) The Informant has alleged that the tender required bidders to have executed specific quantities of single phase and three phase meters within the last five financial years in ESCOMs or DISCOMs. It is alleged that such a clause is not contemplated in the Works Format-4, whereby it created an artificial condition restricting participation of entities already embedded within Karnataka`s electricity distribution ecosystem. The Informant states that as per the requirements of the tender, 50% of the contract value should be supplied in one tender in the last five years. It is stated that the contract value was substituted by estimated annual payment to ensure the contracts awarded to OP-2 and OP-3 could be used to qualify them under the modified criteria.
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c. Deletion of Available Tender Capacity (‘ATC’) Requirement The Informant has alleged that Clause 3.6 of the Works Format-4 mandates that bidders demonstrate sufficient ATC which OP-1 omitted from the tender in question, thereby eliminating a critical safeguard against over allocation of work to capacity-constrained contractors. The Informant alleges that, based on the publicly available credit rating reports, OP-2 and OP-3 would have failed the ATC test, had the said test been retained.
d. Suppression of Estimated Contract Value The Informant has alleged that the original estimated annual payment for procurement of supply of four lakh Smart Meters per year for a period of five years and AMI Service provider was Rs. 162.48 crore (inclusive of GST) per year and the total contract value was Rs.571.72 crore. The Informant alleges that, when the project scope was increased to supply four lakh meters per year and provide System Integration Service for eight lakh meters per year for 10 years across the State of Karnataka, the estimated annual payment was arbitrarily reduced to Rs 107.11 crore per year while the total contract value increased to Rs. 997 crore. The Informant alleges that this downward revision of the annual estimated payment and increase in total project cost had no rational basis and was undertaken with the intent of artificially lowering the financial qualification thresholds, particularly in relation to minimum turnover and work experience. The Informant alleges that the actual contract value should be read as Rs. 5,296 crore and estimated annual payment was to be Rs. 1,059 crore.