XYZ And The PCMM, Integral Coach Factory (ICF), Chennai & Others

Case No. 18 of 2023 Page 1 of 11 COMPETITION COMMISSION OF INDIA Case No. 18 of 2023 In Re: XYZ Informant And The PCMM, Integral Coach Factory Integral Coach Factory (ICF), Chennai – 600 038. Opposite Party No. 1 Super Steels C-17 Ind. Area, Phase -1, Mohali. Opposite Party No. 2 Alvind Industries 212 Ind. Area, Phase -1, Chandigarh. Opposite Party No. 3 CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order Under Section 26(2) of the Competition Act, 2002 1. The present Information has been filed by the Informant under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against the PCMM, Integral Coach Factory (‘OP- 1’), Super Steels (‘OP-2’) and Alvind Industries (‘OP-3’), (collectively referred to as the ‘OPs’), alleging, inter alia, contravention of the provisions of Sections 3 and 4 of the Act. Case No. 18 of 2023 Page 2 of 11 2. The Informant has also filed an application seeking confidentiality over its identity under provisions of Section 57 of the Act read with Regulation 35 of the Competition Commission of India (General) Regulations, 2009 (‘GR’). 3. The Informant has stated that OP-1 had published a Tender bearing no. 03220150 dated 06.02.2023 for procurement of 1811 nos. of ‘Lower Spring Beam with vertical brackets PL No 31036065’ for 453 coach sets (‘Impugned Tender’). The Eligibility Criteria (‘EC’) mentioned therein was as follows: “…For Regular Order: Approved vendors in ICF/RCF/MCF vendor directory for the tendered item. In case of differences in approval status of the firm between the PUs, then higher approval status will be considered. (OR) Bulk procurement will be made from the firms who have supplied the tendered item (or) similar item individually (Similar item means :1) Bogie frame complete for motor coaches of EMU/MEMU (BT electrics) drg. No. 57403001; 2) Bogie frame complete for 1600 hp DEMU. motor coaches of EMU/MEMU (Medha / BHEL electrics) drg. No. 53103001- PL 3103 0373; 3) Bogie frame complete for motor coaches of EMU/MEMU (Medha electrics) - drg. No. 61703001- PL 3103 2611; 4) Bogie frame complete for trailer coaches of EMU/MEMU - drg. No. 37503001 - PL 3103 6119; 5) Bogie frame complete for 1400 hp DEMU/DPC - drg. No.32403013; 6) Bogie bolster complete for EMU coaches - drg. No. 32404001, 37404001 - PL No.3104 0081; 7) Bogie bolster complete for MEMU - drg. No. 32904001 - PL No. 3004 0231; 8) Bogie frame for non-AC LHB coaches drg. No. 66703001 - PL No. 3370 0084; 9) Bogie frame for SLR/ Power LHB coaches - drg. No. 83403001, 83403002; 10) Bogie frame for LHB coaches (coil spring in secondary) - drg. No.45503001- PL No. 3350 9736; 11) Bogie frame for LHB power car - drg. No. 53803001; 12) Bogie bolster for LHB coaches - drg. No.45504008 -3399 3348; 13) Bogie bolster for LHB coaches - drg. No. 66704001 - 3399 6817) (or) as components of kits assemblies, to ICF/ RCF/ MCF to the extent of 20% of the tendered quantity against a single regular/bulk purchase order OR 35% of the tendered quantity against multiple purchase order during the last three previous financial years and the current financial year upto the date of opening of tender. Case No. 18 of 2023 Page 3 of 11 In addition to fulfilling the requirement of bulk order as mentioned above, firm should have supplied minimum 50 coach sets (200 nos) of same/similar item in past to ICF/RCF/MCF for consideration of placement of bulk order. Documents to be submitted: Firm has to submit summary statement of past supply performance of same/similar items duly indicating PO details, item description, quantity and date of supply duly enclosing the proof of supply to ICF/MCF/RCF in the form of PO copies along with Inspection Certificate/R-Notes. In case firm has supplied tendered items as a component of Kits/Assemblies, then the firm should attach evidence to prove that supplied Kits/Assemblies includes tendered item & quantity thereof and was manufactured by the tenderer itself and was not outsourced. Note: The sources approved under bulk category/regular ordering for item id 2300037 of Lower Spring Beam (ICF)in United Vendor Approval Module as on date of tender opening shall only be considered for placement of bulk order. The tenderers who are on the approved list of the item id as above as on date of tender opening need not submit any other document in support of their performance, equipment& quality control and financial stability. ICF reserves the right to utilize the Performance Records, if readily available with it…” 4. The Informant has stated that the aforesaid EC sought to place order on those vendors: a. who are in the approved list of the Unified Vendor Approval Module (‘UVAM’) for item identity 2300037 on the date of tender opening; OR b. who have supplied 20% of tendered quantity i.e., 363 or more nos. against single regular/bulk order in past three years; OR c. who have supplied 35% of tendered quantity i.e., 634 or more nos. against multiple orders in past three years. d. In addition to fulfilling the requirement of bulk order as mentioned in b & c above, should have supplied minimum 200 nos. in last three years. 5. The Informant has averred that in the UVAM, under the item lower spring beam PL No. 30054205 and 31036065 bearing identity 2300037, there were only five approved sources as on date of the Impugned Tender opening viz., (a) Pennar Industries Limited; (b) Nanda Engineering Works; (c) EC Blade and Tools Pvt. Ltd; (d) Alvind Industries; and (e) Super Steels. Case No. 18 of 2023 Page 4 of 11 6. The Informant has alleged that vis-à-vis the Railway Board guidelines of a minimum five active vendors in tenders, only two sources were active here. Performance and participation criteria were not applicable on the three non-active but approved sources, consequently, effective competition was limited to two vendors only. 7. The Informant has further alleged that the EC ignores past bulk suppliers irrespective of their past performance and proven record but recognises approved sources irrespective of their non-performance and non-participation. Furthermore, it ignores Railway Board guidelines for weeding out of non-participating and non-performing vendors. It also ignores Railway Board guidelines for inclusion of past suppliers in approved vendor list. 8. The Informant has alleged that despite sudden increase in tendered quantity, EC even excludes regular/ bulk sources which is against the public policy laid down by the Manual for Procurement of Goods, 2022, Department of Expenditure, Ministry of Finance, Government of India and the policy laid down in various Government of India notifications. 9. The Informant has alleged that OP-2 and OP-3 have continuously been L1 and L2 respectively accepting counter offer rates of L1, amongst the approved sources, for last 6-7 years. Furthermore, careful examination of the previous quotations made by OP-2 and OP-3 will exhibit cartel pattern between them. The Informant has alleged that without cartel between them, it would have been impossible for OP-2 to remain L1 for so many years because OP-3 has been accepting rates of L1 without aspiring to become L1. In the Impugned Tender also, OP-2 had reduced its own offer by 14% and OP-3 had reduced its own offer by 27% without any substantial change in steel price index in that period. The cartel between them has always been ignored by OP-1 not only in the Impugned Tender but also in the previous tenders to keep competition out. 10. The Informant has alleged that the standard bid document of OP-1, inter alia, provides that offers from different tenderers submitted from the same IP address in a tender shall be treated as a suspected cartel and all such offers received from the same IP address will be summarily rejected except offers resulting in same IP address due to administrative reasons like technical/ networking issue at CRIS server and the decision of the Railway administration will be binding on all tenderers. As per the Informant, the