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Different criteria to apply for price rigging when many sellers are supplying to few buyers

In  Rajasthan Cylinders v. Competition Commission of India,  the appellants were suppliers of LPG cylinders to Indian Oil Corporation Limited (IOCL) and other Oil Marketing Companies [OMCs].  It was alleged that the appellants indulged in bid rigging by quoting same prices in their bids. The Director General (Investigation) (DG) discerned a pattern wherein parties submitted their bids in various states at the same level to prove price parallelism. The DG in its report indicated instances when the appellants met to allegedly discuss the tender prices. Based on these findings, the Competition Commission of India (CCI), as well as the Appellate Tribunal, confirmed the allegation of bid rigging and imposed penalties.

The Supreme Court while deciding the case has adopted a different approach. While observing the instances of price parallelism, the Court has held that a key test which needs to be identified while investigating cases of bid rigging is the market situation. The Apex Court identified that this is a case where the buyers are very few and they have a control over the prices of the goods being sold by the seller. Such a situation is known as ‘oligopsony’.

In such a scenario, the onus of anti-competitive behaviour cannot be entirely saddled on the seller to mark him as an offender. To substantiate this aspect, the Court took recourse to judgments of the European Court of Justice which the address the concept of ‘oligopsony’ vis a vis competition law. Based on these findings, the Supreme Court allowed the appeal of the sellers and set aside the allegation of bid rigging under the Act.

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