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In Re HPCL v. Alampally Brothers Ltd and Ors.

In Re HPCL v. Alampally Brothers Ltd and Ors.

In Re: Alleged cartelisation in supply of LPG Cylinders procured through tenders by Hindustan Petroleum Corporation Ltd. (HPCL) Vs. Allampally Brothers Ltd. & Others

Facts:

    • An anonymous letter dated was received in the Commission wherein it was alleged that there was a cartel operating in tenders floated by Hindustan Petroleum Corporation Ltd. in contravention of the provisions of Section 3 of the act.
  • The commission, on basis of the letter, registered a Suo-Motu Case under Section 19 (1) of the Act. After considering the information and allegations therein, the Commission passed an order directing the Director General (DG) to cause an investigation into the matter. 

DG Report:

  • The report concluded that presence the market for supply of 14.2 Kg LPG cylinders with SC valve is conducive for cartelization as an industry association provides a common platform for the manufacturers to meet and indulge in anti-competitive acts. The DG attributed that there was meeting of minds between the suppliers which reduced competition.
  • The report found several parties to be in contravention of the provisions of Section 3(3)(d) read with Section 3(1) of the Act. The investigation also identified certain office bearers of the OPs who were responsible for the conduct of the business of the respective OP and thus, found them liable under Section 48 of the Act.  

Analysis by the Commission:

  • The commission after analyzing the report and submission by the parties concluded that while forming an association is a fundamental right, it is in contravention of the Competition act if such association facilitates collusive decision making. It held that there was evidence that such association was used for improper purposes.
  • The commission also found that the withdrawal of bids by the parties was not independent and that it was collusive and therefore in contravention of the act. It also noted that the parties had same agents who led to the exchange of information between them. It found no merits in the contentions raised by the respondents.
  • The commission also noted that the burden of proof was not discharged by certain individuals as per the proviso to Section 48(1) of the act. It also found the case fit for penalty imposition and underlined the objectives of penalty, i.e, (a) to reflect  the seriousness of the infringement; and (b) to ensure that the threat of penalties will deter the infringing undertakings.

Penalty:

  • The commission ordered the parties to cease and desist from anti competitive practices. After dealing with nature of contravention as well as the mitigating factors the Commission imposed a penalty on the parties at the rate of 1 percent of its average relevant turnover for the financial years 2013-14, 2014-15 and 2015-16 filed with the Commission.
  • The Commission also imposed penalty on the above-mentioned individuals found liable under Section 48 of the Act at the rate of 1 percent of their average income of the financial years 2013-14, 2014-15 and 2015-16 filed with the Commission.