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The Competition Commission of India closes an information case regarding alleged price manipulation and cartelization in ship recycling scrap materials. The informant alleged that five opposite parties acted as illegal intermediaries, disseminated false lower prices through WhatsApp groups, and violated Sections 3 and 4 of the Competition Act, 2002. The Commission notes that the Act does not provide for inquiry into joint or collective dominance under Section 4. The Commission also finds no prima facie evidence of cartelization under Section 3 because multiple buyers and sellers operate in the market and determine prices through daily negotiations. The Commission closes the matter under Section 26(2) and rejects the request for interim relief.
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COMPETITION COMMISSION OF INDIA
Case No. 20 of 2023
In Re:
Mr. Uday B. Bhatt Senior Executive Secretary Ship Recycling Industries Association (SRIA) Shashi Prabhu Chowk Bhavnagar, Gujarat- 364001
Informant
And
Mr. Sarfarazbhai Rafique Bhai Ravani Block No. 9 Gayatru Society, Batarvadi Amreli, Gujarat-365601
Opposite Party No. 1
Mr. Ratan Chand Premchand Vikasnagar, Sector-1, B Mandi Govindgadh Fatehgadh Saheb, Punjab-147301
Opposite Party No. 2
Ms. Mina Ajaykumar Rani, House No. 474, Ward No. 17 Kazigaran Mohalla, Khanna Ludhiana, Punjab- 141401
Opposite Party No. 3
Mr. Surjinandar Singh Mamraj Kharola, Patiala Punjab-140602
Opposite Party No. 4
Chander Shekhar Yashpal 1229/B, Butan Pind, Model Town Jalandhar, Punjab-144003
Opposite Party No. 5
CORAM:
Ms. Ravneet Kaur Chairperson
Ms. Sweta Kakkad Member
Mr. Deepak Anurag Member
Order under Section 26(2) of the Competition Act, 2002
The present Information has been filed by Mr. Uday B. Bhatt (“Informant”) under Section 19(1)(a) of the Competition Act, 2002(“Act”) on behalf of Ship Recycling Industries Association (“SRIA”) alleging contravention of the provisions of Sections 3 and 4 of the Act by Mr. Sarfarazbhai Rafique Bhai Ravani (“Opposite Party No. 1”), Mr. Ratan Chand Premchand (“Opposite Party No. 2”), Ms. Mina Ajay Kumar Rani (“Opposite Party No. 3”), Mr. Surjinandar Singh Mamraj (“Opposite Party No. 4”) and Mr. Chander Shekhar Yashpal (“Opposite Party No. 5”) (hereinafter OP-1 to OP-5 are collectively referred to as the “Opposite Parties/OPs”).
The Informant is Senior Executive Secretary of the SRIA, incorporated under the Bombay Non-Trading Corporation Act, 1959. SRIA represents micro, small and medium enterprises engaged in ship recycling activities primarily based in Gujarat.
As per the Informant, members of SRIA are involved in supplying Alang based scrap iron as well as other materials obtained through the recycling of ship remnants. These members primarily deal in commodities such as Alang-based scrap iron, Alang rolling, melting scrap, rolling plate and other similar goods. It has been stated that the pricing of such commodities is decided by the primary sellers based on various factors. Further, the customers would directly approach the sellers, who would directly communicate the price of commodities and thus there was no need of intermediaries in the system.
As per the Information, the OPs (based out of Gujarat and Punjab) are acting as intermediaries between the sellers and customers for the past few months identifying themselves as ‘Steel Service Providers’ and are trying to manipulate the pricing system by spreading false rumours in the market about the changes in prices through WhatsApp groups, which results in adverse effect on the sellers and customers. It has been alleged that for a duration of two years, the pricing of the commodities has been subjected to day-to-day speculation by the OPs, leading to frequent adjustments.
It has been stated that the dissemination of lower prices of the commodities in the market by the OPs compel the members of the Informant to sell these at lower prices. As per Informant, the speculation in prices might seem helpful to the customers in the present scenario, but in the long run, the OPs would take complete control of prices which would lead to abuse of dominant position. It has been further stated that the WhatsApp groups created by OPs clearly indicate an agreement between them to abuse their position in the market.
It has been stated that the Informant filed an FIR dated 23.06.2023, against unknown persons with the Bhawnagar Police Station. In the said FIR, it has been stated that certain unknown persons are operating a WhatsApp group and website who are not related/ involved in the business of plates or scrap and have dishonestly created false identity through electronic mediums and are spreading false prices of plates and scrap. The Informant has also enclosed two newspaper articles stating that a complaint has been filed by the Informant against certain unknown persons with the cyber police for spreading of false prices, which has caused loss to the members of association.
Based on the above, the Informant has alleged contravention of Sections 3 and 4 of the Act by the OPs. The Informant has prayed for an interim relief under Section 33 of the Act to temporarily restrain the OPs from carrying on such activities until the conclusion of such inquiry or until further orders.
The Informant has sought the following relief from the Commission:
The Commission considered the material available on record in its ordinary meeting held on 01.05.2024 and decided to pass an appropriate order in due course.
Having considered the Information and subsequent submissions of the Informant and other material available on record, the Commission notes that Informant is primarily aggrieved by the OPs who are spreading false rumours in the market about the changes in prices by issuing rate cards with lower rates than those of suppliers which ultimately is having an adverse effect on the sellers and customers. Further, the Opposite Parties have formed certain WhatsApp groups comprising more than 15,000 buyers, which has resulted in lowering the prices of the said products in the market. The Informant has alleged this conduct of the OPs to be in contravention of provisions of Sections 3 and 4 of the Act.
At the outset, the Commission notes that the Informant has levelled allegations against 5 OPs with the apprehension that they would collectively abuse their dominant position in future. The Commission observes that it is a settled position that the provisions of the Act do not provide for inquiry into the cases of joint/collective dominance. In view thereof, no case of contravention under Section 4 of the Act is made out.
As regards alleged violation of provisions of Section 3 of the Act, the Commission, having considered the evidence submitted by the Informant viz FIR dated 23.06.2023 and two newspaper articles, notes that, prima-facie, the said evidence does not point towards alleged cartelization by the OPs. The Commission further notes that in the facts and circumstances of the present case, it is not getting established that spreading alleged false rumours/ misinformation is the result of cartelisation or are resulting into cartelisation as there are multiple buyers and sellers in the market and the price of the commodity is determined by way of negotiation on a day-to-day basis.
In view of the foregoing, the Commission is of the opinion that there exists no prima facie case and the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of relief as sought under Section 33 of the Act arises and the same is also rejected.
The Secretary is directed to communicate to the Informant, accordingly.
