Any agreement having an appreciable adverse effect on competition within India is void.

Agreement may be explicit or tacit – may be conveyed by a nod or wink

When an agreement can be stated to have an appreciable adverse effect on competition was the question that arose before the Competition Commission of India.

A reference was filed under Section 19(1)9(b) of the Competition Act, 2002, alleging opposite parties of indulging into bid rigging and market allocation while bidding against the Tender Enquiry floated for concluding Rate Contracts pertaining to a product (Polyester Blended Duck Ankle Boot Rubber Sole) for the relevant period. It was stated that opposite parties had reached an agreement amongst themselves.
The definition of ‘agreement’ as given in section 2(b) of the Act requires inter alia any arrangement or understanding or action in concert whether or not formal or in writing or intended to be enforceable by legal proceedings. The definition, being inclusive and not exhaustive, is a wide one. The understanding may be tacit, and the definition covers situations where the parties act on the basis of a nod or a wink.
The legal position under the provisions of Competition Act, 2002 provides that any agreement having an appreciable adverse effect on competition within India is prohibited and is void. Such agreement, including an action or decision, by or between, the parties concerned shall mean to cause appreciable adverse effect if the agreement has a force of limiting or controlling product and services at any stage and which directly or indirectly results in bid rigging or collusive bidding. To reverse such presumption, the burden of proof is on the opposite parties to prove that the intended purpose was to ensure benefits to end users or the consumers.

The prime reason forming the base of allegation in the instant case was a very narrow difference in prices quoted by bidders and also restricting the quantity of the product to be supplied during the Rate Contract period. The Directorate General in the investigation concluded that the bidders indulged in bid rigging or collusive bidding.

The Commission while disposing of the issue preferred the principle of preponderance of probabilities over direct evidence as the existence of an anti-competitive practice or agreement has to be inferred from coincidences and indicia which once taken together in the absence of plausible explanation can lead to a conclusion that an agreement causing or is likely to cause appreciable adverse effect on competition exist.
The Commission observed that quoting near identical rates is suggestive and indicative of formation of a cartel. In the instant matter, the parties concerned were located in different geographical locations, had different tax structure to follow. They all were part of the common platform i.e. a Trade Federation and they all failed to give plausible explanation for giving near identical quotes. It was in these circumstances, it was held that the parties concerned had entered into an agreement to determine prices besides bid rigging/ collusive bidding.

Reference Case No. 1 of 2012 by DG (S&D) against M/s Puja Enterprises & Ors.
(06.08.2013, CCI)