Competition panel slaps penalties on Food Corp suppliers for cartelisation
25 April 2012
The Competition Commission of India (CCI) has imposed a total of Rs317 crore in penalties on three companies, including agro-chemicals major United Phosphorus Ltd, for collusive bidding to supply preservative tablets to the Food Corporation of India (FCI), the state-owned company that buys and holds a central stock of grains.
The three aluminium phosphide (ALP) tablet manufacturers – including Excel Crop Care and Sandhya Organics Chemicals – have been fined 9 per cent of the their average profits over the last three years.
United Phosphorus has been asked to pay Rs252.44 crore, Excel Crop Rs63.90 crore, and Sandhya Organics Rs1.57 crore.
In its order, CCI said it has found the companies entering into an anti-competitive agreement; and that their "acting together and quoting identical prices has deprived FCI of competitive bid rates in procuring ALP tablets".
It directed the three companies to ''cease and desist'' from trying to manipulate the bidding process in any manner in future.
The CCI investigated the matter after receiving a reference from the FCI, which said that cartelisation among manufacturers was defeating the very purpose of floating tenders and leading to higher procurement costs. It added that as a result of an anti-competitive agreement among the ALP manufacturers, the price of the tablets has nearly doubled between 2007 and 2009.