NEW DELHI: The Competition Commission has rejected allegations of unfair business practices made against 37 railway signalling cable suppliers even as it noted that the scale of operations of Indian Railways requires an "efficient" procurement policy which is in tandem with competition laws.
In a 49-page order, the watchdog said "no case of contravention" of competition norms has been found. There was no violation of Section 3 of the Competition Act that pertains to anti-competitive agreements, the CCI observed while disposing of the matter.
The ruling came on a complaint filed by a North Western Railway official alleging that 37 entities had formed a cartel for supply of railway signalling cables and that they quoted high rates.
Investigations by the Director General (DG) -- the probe arm of the regulator -- found that 11 entities had violated competition norms but did not find any contravention by the remaining 26 entities.
During the probe, the DG had classified the 11 entities into five subsets on the basis of various factors, including structural links and family relationships.
The subsets were -- Paramount Wires and Cables and Paramount Communications; Tirupati Plastomatics and Kanhha Cables; Vindhya Telelinks and Birla Cable; Incom Cables and Incom Wires and Cables; and Myco Electricals, Continental Telepower Industries and Delhi Telecom.
The regulator observed that identical and similar pricing by bidders in tenders coupled with other factors such as common management, sharing of premises, common IP addresses and frequent phone calls, among others, do raise suspicion of collusive behaviour between the bidders.
"However, facts of the present case do not suggest that such collusion has arisen between the five set of bidders," the CCI said.
As per the regulator, neither there is any evidence of anti-competitive agreement or arrangement amongst five sub-sets of bidders nor any circumstantial evidence to establish tacit collusion in the present case.
"Even though the DG found certain instances of identical/ similar pricing, the investigation does not bring out that the same was an outcome of collusion," the Competition Commission of India (CCI) said in its order dated July 12.
According to the regulator, owing to structural links and family relationships, among other factors, the five subsets of bidders had the opportunity to exchange information and coordinate their behaviour.
However, the CCI said, "in absence of sufficient and cogent evidence to show collusion", it cannot be conclusively established that they have acted in contravention of the provisions of Section 3.
"The scale of operations of Indian Railways requires an efficient and economical procurement policy which is in tandem with competition laws and which has promotion of competition through open tenders as one of the cardinal objectives," the CCI said.
Further, the regulator said the rules governing procurement policy of products by railways should be reassessed to ensure efficiency, transparency and accountability of participants in tenders.