Competition Commission Issues Order Against Grasim, Aditya Birla Chemicals

Fair trade regulator CCI on Thursday imposed fines totalling Rs 6.27 crore on Aditya Birla group firm Grasim Industries and two others for bid rigging Delhi Jal Board tenders for supply of a water purification product.

The CCI has imposed a penalty of Rs 2.3 crore on Grasim, Rs 2.09 crore on Aditya Birla Chemicals (India) Ltd. and of Rs 1.88 crore on Gujarat Alkalies and Chemicals Ltd. for their anti-competitive conduct, besides issuing cease and desist orders against the three above companies.

The Competition Commission of India said it found Grasim and the two other entities to be in contravention of certain provisions of the Competition Act for rigging Delhi Jal Board tenders which were floated for procurement of Poly Aluminium Chloride which is used for purification of water. The order was passed on a reference filed by Delhi Jal Board.

While rejecting the plea of being a single economic entity made by Grasim and Aditya Birla Chemicals India, the CCI noted in the order that these two companies are not only separate legal entities but have also participated in these tenders individually and separately.

Further, the CCI said that the concept of single economic entity has no application in the context of the proceedings initiated under the relevant section of the Competition Act, especially in a case of bid rigging or collusive bidding. The penalty has been levied at the rate of 8 percent of the average relevant turnover of GIL and ABCIL of preceding three years. In case of GACL, penalty has been levied at the rate of 6 percent of the average relevant turnover of preceding three years.

The conduct of GIL and ABCIL was noted by the Commission as "egregious as these companies while apparently submitting separate bids, prepared and finalised the same through common channels creating a façade of competitive landscape", the CCI said.

Vide separate order passed in another reference filed by DJB in respect of alleged bid rigging in the tenders floated for Liquid Chlorine- another chemical used for purification of water, the CCI found no contravention as no analysis was done by the Director General with respect to basic price, transportation cost, taxes and policy of profit margin of the parties as was done in the previous reference.