CCI slaps Rs671-cr fine on all 4 state general insurers for bid rigging

The Competition Commission of India (CCI) has imposed a penalty of a combined Rs671.05 crore on the four public sector general insurance companies for manipulating the bidding process initiated by the government of Kerala for selecting insurance service provider for Rashtriya Swasthya Bima Yojna for the years 2010-11, 2011-12 and 2012-13.

The CCI passed its final order on 10 July 2015 on a matter which was taken up suo moto pursuant to an anonymous information received by the commission in 2002 against National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd and United India Insurance Co Ltd, alleging contravention of the provisions of section 3 of the Act, which deals with anti-competitive agreements including bid rigging.

The commission has found that the companies manipulated the bidding process in contravention of the provisions of section 3(1) and section 3(3) (d) of the Act.

While imposing penalties, the commission noted that the present case related to bid rigging in public procurement for social welfare schemes, the beneficiaries of which were BPL and poor families and as such the same was taken as an aggravating factor.

Accordingly, penalties of Rs162.80 crore, Rs251.07 crore, Rs100.56 crore and Rs156.62 crore were imposed on National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd and United India Insurance Co Ltd, respectively.

The director general (DG) of the commission had conducted a detailed investigation into the actions of the insurance companies relating to the tenders issued by the Kerala government in 2010-11, 2011-12 and 2012-13 for the implementation of RSBY and 'Comprehensive Health Insurance Scheme' (CHIS).

The DG had come to the conclusion that the insurance companies colluded with each other and manipulated the tendering process initiated by the Kerala government.