Coal India Limited vs Gocl Hyderabad & Ors., Final Order on 16 April, 2012

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Competition Commission of India

Coal India Limited vs Gocl Hyderabad & Ors., Final Order on 16 April, 2012

1Q.

gimcma *5':-ag €ﬂMPE'§"§"§°§ﬂN cmmmsssmw 0:? §§°~§ﬁ§A {Ease Na. asgmm ﬁate 9% Qrde*r:~ ?§:"0'~1'* 29;»;

Ema! Sndia iimitesﬁ {Cm 1%, Netaii Suhhas Road, Kaikata ~ mmm % '

- infmmant ﬁuif ﬁii Carparatian iitﬁ. {GQCL}, E>=§y§er%ahac§3. Anﬁhra Pradesh Sdeaﬁ ﬁnﬁustriai Exmmsﬁves Ltd. {§§E§_3, Secundrahad, Andhra ?rade§§':

Soﬁa: Endustries Endia Ltd. {$333.}, Nagpur, Maharashtra Bﬁastec Enﬁia Private Ltd. {B§?§.i,$atya Niketan, New ﬁeﬁhﬁ indian Expﬁasives Ltﬁ. EEEL), Eﬁeikata', Wag: 8enga§ Emmi Teés Private» gm {EWL}, Sarge Riketan, New ﬁeihi Regenasis Endustrém Pvt. Ltd' {R§PL§,. Secundrabaﬁ, Andhra ﬁadlesh Teshrm 8§asts india £.'€d.{"E"B§§.}, Semnérahaﬁ, Andhra Wadesh Bﬁack mamcné Eméosives Private i.t:$.%(BBEP§.), ﬁhanbasﬁ, iharkhand

11. Exgyﬁasives Manufacturers weﬁare ﬁxssaaciaizimvs QEMWA}, Siaﬁkata, West Bengai

12. E>:§:§as§wes Manufacturers .&s§m:Ea*:;-Em": Q? Endia {EMAQ3 ﬁecunﬁrahad, Anéhra Praﬁash E3. mixer Expiasives Suppéiers in mdéa.

~ Gppt.:«s,§te Farities Grder under sgctian g? Q? thg tcmmetiticn ﬁat, 2%;

The mfarmation in the instant casa has been ﬂied befare the Commmiisar: by M25 Cczaaﬁ Endiia Limited (hareinafter referred to as the "in'r'm'mant O?' Cit") on 1ﬁ.t32._2G11 under Secticn 19 (1) (:3) :3'? the Cempetition Act, 2302 {hereinafter :"e3-ferred to as "the A<:t"} against e:<pE0s§ve manufactus"ea's/suppiiers in india aiang with their as-mciaticﬁtxs, Expiogives Manufacturers Weifare Assccziation (hereinafter referred in as "E§'«f§WA"} and the Explosives Mamfacturerg Agsociation af mciia {hereinafter referred to as "EMAi") fear their aiﬁeged anti--cQmpetiti\-*3 acts.

2. The facts and a§¥egat§m%ns as ccmtained. in the Enformatécsn, ﬁn brief, are as unden 2.3. The infcirmant, M/5 Coai India Limited, a Pubiic Sector Lindertaking {?SU} :32' Gevemment csf Endia is engaged in the business of productian ax'? taking and N__,T.:.......

_.\-I-"' ' .....

{;i(.~-1.-V \ .?"""

2.2 According ta information, the exgxﬁosive manufacturersfsugsmiers éegopesite ?art§e$ Nos. 1 is 19 named in the infarmatien and etsther expixasive %sup;3¥ier$, in india} are engaged in the actiwty of manufacturing and suppiy afdiffererzt tygeg em' expioséves such as bum exgieséves, cartridge expéosﬁves and {mated accessories in india. EMWA {the Oppcsite Party Na. 11} and EMAE {the 0g}p(3=S§":e Party No. 12) are the assaciations :3'? "mega exgﬁosive manufacturers/guppﬁerg ihereirzafter referrezi ta as expmsive supgiieni}. Tm the year 2089, {MAE was aomzmmicating with the infsrmant on be-haif of the expiosive swgzéiers. However, since 2309, another assaciation by the name of EMWA has been active, writing ta the informant on varimzs issues ﬁ ccsncerning the exgamazive suppiéars, 2.3 Tha infermant has submitted that it has been using different kéncis Cr? expiasiveg far its mai mining szsgnsgrations depending upsn the type :1»? mai mines where the expiasives are is be med. it matures expiaaives fmm expﬁasive suppiiers for that purgaose through a process cxf gmbiic tender frzvséving twc: stages ~ submizzsion 0%' teams-commerciai bécﬁs faiiawecé by the subnﬁssion of prime bicés by the smart ﬁimzd bidziera. ¥>ri0r ta .f3G0?~G8, both the teizhnmcammerciaﬁ bids and the price biés were required in be submitted in paper farm. Hawa:gg£§gmMth\Ei"fect from 2OG7'~{38, system of

-*"'6'€x {x V >.

..-}§ xx.) Eiectronic Reverse Auctien isfgéim > Tice bids in accordance wash S' 'W E, .

\\ the guicleiines and arzﬁe-rs issued by the Cemrai Wgiiancs: Cnn*:més:5§0r1: .9?

inciéa {CW3} on the issua.

2.4 The infermant has further submitted that it has aiways endeavoured ta cenduct the pmcess Q1' tender in a fair and %trans:parent marmef, with the ahjéctéve :23?' enauring maximum gaarticimtéon by the quaﬁified bidders. it has sought ta gsromtste the campetitive gsmcéss arsd mcﬁuce chances cf e.:e§§usi£sr:

by tha bﬁdciers through Entraductian :3? system of Eiectmnic Reverse Auction.

2.5 it has been aéieged that the ieadéng expioséve sugspﬁers named in the informatéon cantmi abeut '}'S% cf' the tots! maa"§<ei; share anti" since they have formed a cartet ?S% :3'? the market has been carteiised. This carteﬁised beinavﬁour cm' the expiasive suppﬁers has caused and is centinuéng ta cause harm ti} {ha informant in purchase an' expimsives. According to» the infmmant, the coiiective iiiegai actiuns of the expiasive sugspﬁers have resuited in an appreciabﬁe adverge effect on ccmpetitian in Endia in sevierai mievant markets, inciudéng the market cf bzsik exgzsitzsives, cartridge expiosives and fuses and det0na'mr;s;.

2.6 As per the infmmamz, carteiisation among the» expicrasive suppiiers ms 2 been in existence gimme ZQQB and»~§'§f§?iﬁ7ﬁT T to exést tiﬁﬁ date. it has been .v"';a[.~.

section 363(3), 3(3}{§:») and 3{3){g§} of the Act threugh their verieus acts Eike ca§§ee:tEve§y boycatting the Eiectmnic 'Reverse Auetien erganised by the V§efe:r'mvaet ?'irza¥§eet§on of Running Ccmtreacts in éenuary 2318 and writing identicai Setters is the infermam: in this connection, co§¥ectiveEy steppérzg suppiies and threatening in step sepeiies Q2' expiasives to the inferment in the years 2€3€36, 2U£I3?', 28:39 and 23328, coiiectiveiy fixing bid §Z}£'§€:§3$ m 20:39 and submitting Edeenticai price bids in resgmnse in the teneer fez' the pmcure ment of expéasivee in 2€3€}S~Q6.

2.? Accordieg te the Enfcwmant, the antincempetitéve practices ef the Gpposite Ferties have net erzﬁy eeen aeverseiy effecting its business eeereﬁens bay:

eise affecting the interests 9? the end cusmmers in terms of higher prices of A the ﬁnaé products emduced and aim in terms. cf iewer eavaiiabiiity ef eaten:

in merketew

3. Prﬁme wfeeie Greer 3.1 The Cemmesiee mns§¢:§ered the Enfermeﬁon in its meeting heﬁd an 24.32.2911. Having examinee the 'Facts and avermenm, the Cemméssian farmed a grime fade epinmn and referred the matter under section 28 {1} ,,,......a.--..

}''-x.

cf the Act to the Directs»? Genegegegeea 'L,f®\\}referred ta es "the 3:3") for 'V _\n J a \ carrying out investigation imze géhegjma §j_§~ 3..

4. imiestigatiara by Q6 1%,: Pursuant to the mrders of the Commission, DEB mnducted mvestigatien mm the matter and submitted his remrf ref imiestigation dated; .T.»iS.O§.2S1iA to the Csmmissiun. The findings -of the E6, in brief, are as under:

4.2 After taking into ac::::3t,m1:% varieus factors tisted in sectian 123(5) read with aectizm 19{6} and fL§{?} cf the Act, {)6 has deiineated the reéevant market in the gar»;-zsent matter as the "v::3nsum;:3tE0n of buik and tartriidge exgsiasives within the temtary m' Erzdia."

4.3 B8 has submitted that the infcsrmant requireg buik expissives and cartridge :ex§:sk3s€ves tagether with ether accessories in operate its Open Cast (OC) and Undergmunci {U3} maé mines which are gzzmcured {ram the expiosﬁve sesppiismr. {apposite Parties in the matter} thmugh a pracess cf gzaubiic iiE:'i"td€:3§". The infarmant enters ints) Running iiantractsé {RC} with the expﬁeésive supgzxiiers 'fer the suppiy <33' expioséves at a s;3ei::'ifEec§ prim far 3 specifieszi perimd. The infmmant aisa empaneﬁs game suppiiers in reserve 3:3 that when a particuiar RC hrséder fails to suppiy the exgiasives; it may piece oréers on them $51 orciaar tn get assured suppﬁy :3? expémséves.

4.5; As regards the a§i%egat§9r}§,.esf;§§§;{7€§,_. iveﬁy fixing the saﬁe §3i"§C€?S :11' has feunei cant that eitheegh the expieséve augseﬁiers ate spreett estress the country and nertieipated En e erecesg ex' seated tender, there was a sénwheréty tn the mice egueted by different exniesive supetiera during 230635436 which tefﬁects meeting ef minds and concerted aetinn tn' the exptesive suppiiers.

4.5 Accerding to $36, it has heen argued by the exeiesive suppﬁiers that identicaﬁ price queted by them in the tender during the nested 230566 was on eccetmt at unprecedented increase of Ammonium Nitrate in the year 2694, which is one of the raw meteriats fer manufacturing expinsivest The expieshxe supniters had aise apereacheti the Chairman, CR. te get same reﬁief in thés regerci. Accerding tn the expteshze suppiiers, the then Chairman, Cit, had suggestett them tn quete the enhanced price Sn the subsequent tender hid so as in compensate the Eese inentred tinting ZQG4 and as: suggested by the Chairman, Ch. ah the expinshze augcsnhers queted tdenticg-3% price ef Rs. B538/-- per MT in the tender not 2{}€}5»G€S, jump at' 45% ever the Last: Purchase Price (1.9?) at' Rs. 132S;!,'~ pet MT fer bank expiiesivels.

4.5 However, eccenéing to BE, the efereaeid submissions of the exniesivte suen§§e:"s are not veriﬁehie since there is he decumentary nrnnf made aveitahie by them anti the Enferrnantt eemgaami has e§se denied that there Chairmen with the texptosive 'K was such understanding made §::2{"'t"s':"e"?-'£1 * fa-"::=."2.r.

-r'm_bg*'\t\he fact that the expteswe suppéiers submitted §denti::a¥ price bicis, {)6 has comziudeé that there was conaeried action amcmgst the exgﬁosive supp?-Ears whﬁe bidding far the tender far ﬁche year 2G¥.'35--~G6.

4.? 5-iowever, %whi§e conciucﬁng that the expmsive sa.:pp§ieEwere engaged in the ccmcerted action sf submissicm of identicai financiai bids in 2005-G6, Dﬁ has aim submitted that it £3513 net centénue in contracts for subseqaient years. Aezmrdirsg to BE, since the enfarcement pmvisicsns :33' section 3 were noﬁfied 0n§y En Méy RG09, the acts of gusting identica! bid rates am? bid rigging in Hnanciai Year 2305-06 dc: mnt get cave-zreé under the pravigions tn' sectimn 3(3) 0'? the Act.

4.8 As regards aiiegaticms Q? %coE§ee:i:§\:e fixaﬁon :3? bid préceg gmst ncrstiﬁcatkm of the enfarcement giamvisicms Q'? the Act, BS has considered the ietter dated 3.3"' Gcmber 2%{)€3s§ cited by the infﬁrmant and has canciuded that no attemgst was made by EMWA thmugh its ietter dated 13* Gctober 2889 in fix the mice :3'? expicsives s::;»§d tn the infsrmant as has been aiiegeti 43 According to D6, the ietter dated 1.3"' Gctaber 263$, acicﬁresaed to the Chairman, CH. was an appea¥ by the President, EMWA mat to cu:'ta:§E the suppiies of expéesives without am:

g 5;' : ..

*- fa 'p_\v'.'\ ' , w'N~»»'~"':73'"x that the expiosives manufacturers had huiit up sufficient caeacity te cater to the committed quantity for the next three years in View of the assurances given in iietiee inviting Tensier issuesti in the year 2968 and it orders were short eiesed, they weuiid he facing suhste htiai iinahciai ioss.

4.10 in the eteresaid ietter, EMWA aiso assured (Iii. that they weuiti he egreeahie te amend the price variation ciause and aim review the prices for the secehd year ie. with effect from 1" Seeemher 260$ as per their mutuei censent. EMWA aise made an appeai in the atereseici Eetter ice caii the expieshie suppiiers fer discussien so that the sanctity at the Netice inviting Tender issued on GIi.ﬁ?.2€iB8 eeuiti he maintained.

4.11 According its the {K5, the informant has treeteti this iettet as 3 notice for price fixing and has igmzired the centext and cements at the ietter. 36 has hretight met that the interment had e>cpi'essed its inehiiity to centimse RC3 at three years due to dewnwerci trends oi' price of Ammenium Nitrate.

Te sert set this isaue, the expiesive suppiiers had heisti e mzmhes' of meetings. with management cf the informant company inciudihg with its Chairman. in the meetihga, Chairman of the informant eempehy has? requested the members of Eixriiiim te give in writing their acceptance en the issue at f uentiy they had written iettei ..-"§'\-\'?.\ 7 ' dated 13.19.2309 giving ;us§.tiii;§§éi-i';§ «- '

7.r'C.\ :

I ,ei:gvinu.etieee at the Running c .

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''7 ? -A , ,.

Ccentracts. The saiﬁ fetter, accszsrding ':0 BS, dues mt :2:-gtabiish that the expéosives manufacturers had farmed a cartei to fix the prices.

4.12 Taking into account aii the reievant facts, BS Eras repartesi that my eviéence ceuid be fmmd in the case suggestmg rzmiiective ﬁxaticn of the saie price cf expﬁesives by the expéesive suppiiers exnept Vfsr 2.G{}S~Q6. Hewever, since the cormact far the financiaﬁ year 2D€)Sw-£36 was executszd and ca-mpﬁetedf within the fiz'zan<:§a§ year 2{3¥::S--05 itseif, the cencerted acﬁan ceased in exist weﬁi before the natificatian sf seczticn 3 sf the Act. Based on above, 86 has cenduded that the Qymoséte Parties have mt contravened the pmxsisian cu' secticsn E5 (3) {3} cf the fact.

4.13 The aiiegaticmg sf iémiizéng and s:or3<tro¥E§ng the market :3'? the sz.:;3e;::§s,; sf exgsiesives have been invastigated by the £36 cons%ideri:°sg them irate thrae distinct gseriods as mentionad 3:': the infcrmatim; viz. 12.G4.2{){3E is ;i.5.0z$.2{itO6, 31.01.2905? to ﬁ1€€}2.2Q€39 and 23..Q3'2€33_0 and Aprii 291i} is June 2818.

4.14 Fer the ;;:=es*Ec3c% betweeen 12¢€}s'1.2B€36 and 15.64.2005, it has been reparted by {)6 that the documents submitted by the ﬁnfcwmant 'semi ta substantiate the fact that cegggfh .6'. A °" $3' -'5 .;>' disrupted during the periczé. it hag been ngtecé by the ES that one of the suppiiers has aﬁso admitted the 'fact :13? stepping me suppiies 'ta ysmtest againat the unﬁaterai amenciment m" perzaitv ciauses msed Lzgmn weighteﬁ average powder factcw.

4,15 ﬁn the basis cf facts on record, {)6 has conckzcied that same of the Gppesite Parties mentioned m the information indeeai acted in a cesncertexci manner it: step the sugpiy sf exgsmsives during the gaeriod 12.G4,20G6 ta 1€5.ﬁ4.2{}Q5. Hawever, accorciing to 36, since the garovisians of sectiesn 3 were natifieti cmiy in May 2389, even if the bidders acted in .33 ccmcerteci manner in Financiai Year 2{}{3S~(}?, the game cannat be heéd as viaiative cf secticm 3(3} {E3} of the Act.

4.15 as regards aﬁegatéons :3'? stappage of suppiées during 31'G1.2Cr09 ta 01.02.2;Qﬂ9 and 2;'L.Q3.2{33_E¥, BEE has csnciuaieé that evic¥em:e is nst sufficient in egtabiish that the exg3¥a$§ve suppiiers had actuaih; stepped sugpiies ccﬁiectiveéy during this periad. According is DG, the fax dated 3.6.G?.?;01O reiied upon by the infarmant ta SU§Z3§){£3f't its afaresaid aiiegations simgaiy states that the suppiy <3'? buik wading exgﬁesives was 'nii' if.) one cf the subsidiasie-:3 cf the infarmant Cg @ﬁ the speciﬁeci siates and daeg \':_\':¢n. ,4 '\ ' 4*' .-">.

',\\~ '\ { unﬁt paﬁcains 1:0 oniy me subsidiary anti tharefmre 'ﬁt Camus: he unéfarmiy appéieti ta suppiies in respect sf expﬁmsiues to aii ether subséediaries.

61.1? s?x+::%s:m'::iing in D8, the ether fax me-saages reiied upim by the infarmant 141 '$3 aése do mt estaéaiish any c:3nce:::::3%§d actimn 0f the suppiiers in stepping the suvppiies during the £.§3§3:cEfied perimd. On the ather hand, the exgaiasive Supgiiers have submitted data to shew that the S£.£§3§§§§€S have berets _ma«::¥e regVuEar§y by them. Any dismptien m' stzpgﬁy far a day or 5:) was due ta speetéfic reasans :31' an imiividuai supipiier. Hawever, there is no case 9'? any cmiiective stc:a;::pageAs ﬂy 33$ the sugmeﬁiars at a given date. {X3 has ccénciuded that in the ﬁght of evédenses avaiiabie an retard, no case: is made wt of stnpmge 0'? suppéﬁes by the appesite parties cm the specifieﬁ ciatgs »

31.{31.;3*.8{3§ ta ﬂ1.{32.2{iQE3 and 21.33.2818 which may be saéd '31:) be ﬁr':

camraventiczm of pmvisians of sectﬁan 3(3){b) cf tins Act.

4.3.8 For the §3eri::::§ Amii 2818 ':0 hme 2010 aim, taking mm accaunt the repﬁies 03° the expiasive supmiers, D6 has concmzied that there might be atappage far day or 'awn by an individua3 csmgany due ta shortage of raw materiaﬁs and financ§a§ crunch. However, there is no evidema Q'? ccsiiectéve decisémz taécen by the expimsive suppE=ies's in stage the sasppﬁy cf expiasﬁves.

Accortjing to £36, therefore, t¥za";il£9§g m' the infmmant :3? Eimiting ''f''5.2\K { \ '3 ~. 2 . e sugpiies and contmﬂéng the n1:gi'§<~§"§9z ' ;_3¥'<:g§¥§g 5 during ﬁxpni ta fame 2813 do net sctanci estebiished and ne case is maee east ageing}: the expmséve seppiierg in vieﬁetien ef sectiee egsxe; ef the Cemgtaetitien seat, 2882.

4.19 ﬁn the issue ef eeeiiective threat te stoe sugzneﬁie of exgﬁeséves, it has been reperted by the D6 the': the eiiegatien E5 based en the feet that same expiesive eazepiiers heé issued identicei ietters for steeeing sueplﬁes from a ,eartEcu§er date :3'? 25.10.2816. Heewever, the eiiegatiens have been eienied by the aferesaie parties and it has been submitted that there was me stoppage ef su;3p§y ef expiesives with effect from 25.182613 ea has been eiieged in the iefermatien.

53.2% B6 hes eﬁse repertee that nennsugseiy on e eerticumr day cannot be treated as steegaege ef seugpmy eeﬁeetiveiy by 333% expiesive suppiiers. under an agreement. Accercﬁing ta B6, the infermetmn regerdmg reguier supeiées made by the expiesive sugapiiers has. been eerreherateeﬁ by the centres»:

ereiers and suppiy statements. furnished: by them 86 has eise submeitted that expvﬁesive sug:,ep§Eers have attempted to make mere than §0% of the supeiies to became eiigibie fer the subseeuent tenders fieeted by the C§i..

4.21 Aecereing ':0 D6, aitheugh the contents ef the eiiegee Eetters are identicai, the subject matter reéaies or' ''_..w mmen interest ef the exp-iesive .-" 'T"

a 1 '$1. .~ , . . .

su iiers with re are fie safet , eejéeea ortatson of ex Eeswes m 3:' éZ''\. 2"" V 5 ' M §(.3'c':,-) if \ K3 ,\ £3 \ '3'\'<«~"' K 6' {*5-If' ' ); I .-'\.'«:'2"_'.-'' ,_.:(:;'..Y _ \._',,;\;";'j.\»v-

'\\§'.« N'.

compiiance m' the guideﬁmes of Petr<3§eum am} Exgrzimsive Qrganisatimn WESG}, which the infurmant has treateé as a threazt 'tn Stop the suppiy cf expiosive by the afczresaéid companies w.e,f. 25.1€3.2{}10$ 4.22 Cm the basis m' afczsresaid, D6 has cenciuéeé that there is ms evidance an record to shcaw that there was 3 z:0i¥e::tive threat of stoppage sf wppiées and that the Suppiy of expinsives had aisa acmaﬁiy stnpped with effect from 2S.1G.2(31€3. The cardinai issue in 32% the ietters reiieﬁ ugaan by the Enfarmant is mmpﬁance of PESQ guideiines especiaﬂy with regard ta safety, securéty and transpartation of the expiasives which wa$ 23 iagitimate ciaim sf 'me expinsive suppiiers since they were handiing a hazaxcimzs ;arm:iLs::t. Ccavnsiaﬁeriing 35% these facts, [)5 has mnciucied that there £5 no {$3.56 of carteiized behavéour on the part am? the expiesive manufacturers tewards contméiing or Simﬁing guppiies by way of issue: ef coiiective thssats in vioméan sf sectian 3(3){§a} cf the Act.

«$.23 Cm the issue cf coiﬁective b<::»yc<::s'tt of E%es::t:'cm§c Reverse Auctian in 2816, D{3 has subfrxitted that far the said auctian, the expﬁosive guppiiers whcs were tgchnicaiﬁy quaﬁfieti fer the: sugzsgsiy of e>:;:>E«.:as§ves were given §B number by the informant to Bag in ":0 the system ta submit their finamziaﬁ Krishna Expmssve and Z) i Premier Exptosive Limtteé, no gather supptisr submitted mice tsicﬁs because at the incorrect ceiting ﬁxed by the Enttzsrmant, which was not cumztterciaiiy véahie ta them.

4.24 According ta £18, in sttite at the fast that the two tsxpiosive SL§§}i')§§e§'S submitted their price bids, ctmtrsct was mt awarded by the Enfermant ta them, which was against the norms of NET. Further, the fact that 33% attser bidders participated in the reschedtuied eﬁecttonic auctisn heid mt 15.01.2919 atso indicates that they had no Ententéan to bttyetatt the reverse auctmn in spite at the high ceiling price fixed by the tnfersttant.

4.25 According to the DES, icienticaf tetters dates? t}?.€}3_.;203_{': written by the {Wet} exptmsive suppiiets highiighting certain issues tetating to reverse auction tin not estabiist: any ccmcertetﬁ action amtzmg them. The Eettets were actuaiiy in farm at requests ta the Snformant ts) review the different issues as tsgatcts Eiecttttmic Reverse Auction amt ttxetefare these ietters canmst be treated as cancerteci actitm. in Eight of these facts, DC: has mntziuded that it cannot be said that the expiasive mamztac'turers and suppiésrs had coitectiveiy bmrcotted Etectrtmic Reverse Austins.

4.26 Eonsiﬁering the facts of the case in entirety, BS has csncitstted that :

s.

vicsiative in terms at sections 3(§'}{ K F 4.2? E.'J{3 has aim st;-2%;e::§ that the Enfcarmant and the expmsive m%aLr:'ufa'i:%;urer's' have iong panding wntrazztuai ﬁéspute amongst them and therafnre, aiiegatimns and ceunter aiieg;-mans have tseen made by new the informant and the exgsiosmz manufacture-zrs an ci§'f':'érent csccasicms. The aﬁegaticms in the present case are naming but the counter aiiegaticms as" the informant against the expiosive suppiiers whc: had 'féieté infarmatican before the Csmmissictnn against the informant in case ma. zmfzam.

$28 Summarising his "findings, D6 in his report has ccsnciuded the-at aﬁthcugh evidences da suggest that the expiosive suppiiers were Engaged ﬁn anti-« carnpetitive 32125 0%' fixaticm of bédfgaie price for the suppﬁy Q2' expioséxses and Eimiting the suppﬁy cf expsicssives during 2GGS--20sZ}£:3 and 2§£'36~2{}€3?, since the garovisians of secticm 3 the Act were aw': in farce {faring that period, the e><p¥asiv£=s manufacturers/suppiiers are not Eiabke for viaiatéan of the prm.r§sion:~s sf secticm 3 {3} {ea}, 3&3} (is) and S§§3(:ii§s'.}¥"s 3 (2-33 (Q) :3? the Act for the said acts.

4.29 As' Iregardss the aiﬁegatizms m' carteiésaticm ft}: tha peeriod post mtﬁfication af pmvi5§a:ms :31' section 3 01' the Act, D6 has reverted that no such evidgnce has been fmmé against the expmsive manufactLsrer%s/supgﬁéers. Accmciéngiy, {)6 has cczmtﬁuded that the expissive of section 3 {3} {a}, BB} {b} and section 3 (3) {:13} 02° the Act' En the whoie matter.

S. The Camméssian after considszring the rapes": of the Q6 dscidecé in send a cam; of the regzmrt as' as to the infarmant arm the Qgapasite Partﬁeg for ﬁﬁng their repﬁies/ebjectiena, if any, to the Cammissicn.

6. Raw; 9? the Qpgaasiia Partﬁes ta ﬁne Repart ax? $5 $3.23. in their repéiesa to the repert of B63, written submissﬁons were ﬂies' by seven of the Opgmsite Pamea. The GP-=2, Mia §dea§ incéustﬁai Emicssive Limited in its regsfées submitted that it had newer engaged in any amvity cf bid~rigging or manipulation of M3 pracess. Ft was aim mt engageci in boycott caf Eiectmnic Reverse Auction heﬁd by (31. m ianuary, 2010 and has never given any threat is: step the supgiies of expicsives and accesseries to (EH. Cu' to any of its 5t:b:5§d?iaries at any point of time.

6.2 The GP--1G (Mfg Keitech Energies Ltd.) in its repiies aiso deniecé 'me? it was ever invoweci in any anti-competitAive actﬁvity.

6.3 M/'S Guif Qii Corparatisn Limiteci {<?§P»1}_. M/s Saiar industries indie Limited (GPK-73), M,-'s Biastec Endia Private Limited {GP -4), Mia Emiian Emséasive Limited { GP-5), M/5; Emmi $15,-;¥ex{?'g'*i:i533:i*£e<i (GP -- 6) , 8¥ac$<.E}§amond % Exgcaiosives Private Limitecﬁ iﬁksubmit their stepiies an E"

E;Ea \:

\5N_x" ' substantive issues and eniy submitted their financiai tteteiis for the finenciei year 2GO8«{J9, 1-§{30§~:t£3 and 2{}1G~2{}:t.'t.

6.4 Urai zwgurnents were aise ativenced by the representatives of MKS mdien Expiesivee Ltd. and M/5 Biastes: mafia Private Limited in which .a¥Eegat§ens Eeveiied againet them by the ilntormam: were denﬁed.

7?. Qbgeictéerae et the internment tee 3&5 Repeat 37.1 The interment tiﬁed itg objectiens to the findings ef the SQ vide its submission detect 08.12.2011. Besides, orai arguments were aise advanced by he Eega¥ ceunseis befere the Cemmiesien. The eb§ecti.ens of the interment, in brief, are as under;

'22; in its tepty, the énfermant reiterated 33% the aiiegetiens ieveiieci against the Gegaesite Parties in the mfermatien amt expressed its disagreements with the timings of £36.

7.3 The Enterme nt has stated that en anaﬁysis of price bids for the years 2€}ﬁz$~ 05, 2035--£3?, 2€)G7-E98 and 2{}{38~09 cieariy Show that the exeﬁeeive supetiers had engaged in certeiisatien and hid rigging during these years; ﬁtcgezertiing t0 the informant, identieei bids are not §Mp'§g--§e\qtzi5§te for b§d~rEgging as has M *>"V \-

"'§§_t;§ether the bittde:'5 agreed '*2 . ce§e in the matter. Ever: en 9 w.

4'' 'C ~«'i§\ .-: .

been mntended by :36, but the retgééfi "

extremeiey nerrew restrkttive understanding :2"? biiiwigging as taken by the DG, the anaiysis of data carried cut by the £38 £3 iﬁawee.

?.a=1 The inferment has submitted that foiﬁewing cemmen features were .

present §n bids suirzmitteci by the expiasive Suppiiers in each of these years:

3. The difference in 'side was very sma§i, around 1% to 5% of em ameurat.

ii. ' Despite the ciifference in the béd anmzmts being iess, eﬁ the expicssivees meanufactiurers were wiiﬁng to sugppﬁy after negetietions which suggests; that the initiai bids were beingeertmciaiiy kept at a higﬁ Eeve§. if the eriginai bids had been maiie in wmpetitive market eersditions, they week} have apgroximateei the coznpetitive garice. Hewever, the 'fact "'::%';at aii the exgaiczsive ma:nufac'mrers were uiﬁmateiy wiiiing to suppiy for substantiaiiy Qewer amounts stmngiiy suggests that the Bnitiai bids were met at mmpetitive prices.

iii. Bifferent expiosive menufac'£u§'es's wen different bids, showing that there was poeentiaﬁ market sharing by the expiesive menu'§ec:mre:'5.

"L5 The §nfer'mant has further submitteci that severai of the bidciers quated icietvtietzai prices in their bids for the year 2{}{}4~OS~ and Eﬁﬁﬁ-0?, which ehnws there was carteiisatien in the yeee§;=':3ﬁ:ee\§han the year 2£}(}S--08 em)' Further, the bié prices for the \,§f§§:t§2§;§EQ:

,.««r~;';"-» and 3.296 which shows that the expiashse manufaamrers were met ma§»~;§ng pricing tiecisicms in an indepeemtiant manner.

7'16 To sufapsrt its aiiegatian that the gxpiasive suppiiers were engaged in cmliective fixing of prices in 2889, the mfsrmant, in its repiy hag reﬁed upcm the ietter dated 13th Gctobgr, 2809 'fmm EMWA to the informant ta ccmtend that EMWA was taking éecisians with regard to pricing , as it was agreeing, on behaif of its menmerg, ta amend the price variatémn cﬁause and aisa was <::aESec.tive§y negotiating with the infmmant which is agaénst the tenets 01° the sectien 3(3) of the Act as the saié provisianggaf the Act: pmhibits trade aasmzéaticms fmm discussing pricing §SSUE*S and the members sf the association are recguired in take ciecisizms regarding garicéng Endependentiy without coﬁusiczsn.

1?. As regards its aﬁiegaticns sf stnppages in the year 25.33% and 2318, the Eafmrmant has submitted that D5 has ignored var§0i.s5 ietters written by the infarmant and its variaus subsidiaries during Aprii Zﬂiﬁ tn Sub; 2813 which pravide cmntempmaneous evidence :3'? shmrtages and stoppages in sumyﬁées sf expknsives by the expiogive sugagcsiiers.

V7.8 According ta the énfmmant, D8 has canciuded that the exmosive suppﬁers were suppwéng the mir}§§Q'Lf"Mm§§- Sty required to be eiigibke for g.-é>;\'_ C .»~'__.§\ ' ' submitting bids in a suhsequeg§*~'"§gf§a E K \ ' tiff stappage {if smiiwpiée-as or smggish suppiies, Thés camciusion :3? {N3 is E:nt§:'e§'§i -* ' miscomteived since a gsiain reaming :3"? the data referreci to by the SS makes it dear that sugspﬁes were extremeéy erratic, with severaé suppims faiééng {:0 su;3;:»B~,: §{}% an' the tender amount 4, which is aiiegedﬁy the ammmt the expimsive suppﬁiers needecé ta suppiy in omier ta be eﬁgéhiez-2~ ta re«te:-znder. "me data reveai that the mnteméan 0'? the czasigziosive suppiiers that they have aiways sugmiied at above 93% of the ctmtrazt quantities §s entireiy faise since there have been severaﬁ §nstam;es 0? sugzpiies faﬂing beiow even 60% and an nxore than haif of the occssicms, the expioséve sugspﬁisc-zri; have suppiiecﬁ Eess than 90% cf the csntract quantiicies offered by the irifarmant. That there was intermptian in suppiies by theexpﬁnsive %supg3§ier5. is aiso re-zzmgnized in the arder of the Cammissiszm in case no. 4 sf 2018 concerning Cii. and the expiasive suppiiers.

'F99 The informant cempamg has aﬁsc; submitted that fmm 2385 onwards it has effectiveiy beam at the mercy of the exgaiogive suppiie:'s and has aften not reseivsni the quantities sin' exgaiesives that it was supposed to receive fmm thema As a resuﬁt, it has been farced to give in 'ca severai of their unreascsnabie ciemzsmsis, regarcﬁng prices as WES as the quafity cm' expiasives;

causing an AAEC in the market. Gm: exampk: af 3 mmpmmise mat the /<*'''""":' /1' 2. s~»:,..=v:=r..2es~,,~ a I}. "

'Heweveer, the expiosives manufec§:u:'ers,4 ree§Es::mg-- that this woum require them ta impmve the egueiity :2'? then" products, have refuseti ta émgaiement thés etipuiatiexx '?.1{} The infermant has aﬁso ccmtested the eenciusiense of {)G that the aﬁegaticms ef cmﬁective threats te step supgﬁies and iaienticai ietters sent by Endependent exgaiesive manufacturers have no merit as they are eniy against a few cf the manufactureerg and because suppﬁes were rm: actuaiiy stepped. Stating that the cencﬁusiens of B8 are fundamentaiiy ﬂawed, the informant has e-submitted that the fact that the szmpiies were not ectuaiiy steegzaeci en these dates is entireiy irreievant. The mere fact that the 5upp§ies; ef expiosives were not actuaﬁy steeped dues; not mean that the effence under the Act was not cemmitted. That there was a ceﬁective threat ef désruption §n suppiies by {$78 e;<p§esive manufacturers §s eneugh to es;t:ai:'s§i5h that there was an anti--mmpet§tive agreement among the cempetitars.

13211 The informers: has aise submitted Setters dated 2S.'.1{3.2Q1{} in' three expiesive suppiiers ta supper: its cententien that they had coiiectiveiy restarted to issue ef threats ':0 step sugapiies. The mformant has 3350 stetee that certain letters were gent by the exgiasixse suppﬁers in Pxéevember 2311 as weii which stated that uninterr'u;3ted guepéies 'week? net be pessibie by 3.12 According to the interment, EEG ties ieiieci to centect any etiier purchaser et expiesives te enquire about the effect ei' cattei at the expiesive manufacturers/stipeiiers on their business or any ether €}{§.3i~;}S§VE3 manufactures' even when the information cieertti iists "etitet exeiosive manufacturers" as contrevietiirig parties.

37113 The interment has aise contended that en the issue of heycett et reverse euctien in 2030, 35 has igneteti the fact that but for two exeiesive tuppiiets none other participated in the reverse auetitm. Seine at the expiesive manufacturers wrote back te the infetrnerit expieining the reasons for net participating in the reverse eectitm. The ietters written by same ei' them cm the issue te the interment were itietzticai and demensttateci that the expiiesivei manufacturers were acting in concert. The taiiure ei' the expiesive memstectuters to be part at reverse auction on 4-=.S"' ianuery, 2:318 censtiiteteci beycett at the reverse auction which is in vioieticm at seetien 3 {3} read with sectien 3(1) oi the Act. (lie 15*" January, 2818 the exeiosive mamitatzturets diet piece bids which were tseiew the reserve price in the reverse eutitien, despite the tact that the same reserve price was used in both the reverse euctiens. The bid prices teii uete 32.08% beiew the tzeiiing price for certain exeiesiveis on 15" 323:':

tiery 283.8, proving that it was eieerty Tim?' .n~""

.- \ ectmemieai to seii tieiew the '7' .

us, ebservetieitz at the D6 \ 1'12 ff?.'{~.U. >1)'

4.2;. .,1 , } ~''''''w ,,.-

---saw justifying the neycett of reverse aectien en 4~5"" jenuersg, 2916 en the grnunsis tttat enacting a price betnw the netting mice was net cnrnsnerciatty viebie 33 net tegicei.

'}'.14 According to interment, the BS has net attempted in shew that there was a Back of cencerted aetinn'. instead, the repett ef QG onty teceses en prnviding e itsstificetinn far that ectien. if eny individnai ntanufetzturet unitateraiiy jdeatidee to ti-eycett the auction, there wnuid be ne vintetien of section 3(3) read with section 3(1) 0'? the tiemnetitinn Act. However, the feet that aii the bidders except two decidect net to submit btds on 4~S"' ianuary 261$ suggests that there was ccsncerted ectien erneng them.

"$.15 According tn the informant, the existence anti szeneuct of the caste? among the expiosive suppﬁiers has caused anti continues to cause an anpreciebte adverse effect an cemeetitien in éndia, by harming its coat mining nperatiens and business, anti by increasing the cast of exniosives precu red by it.

7.18 The Enformant has aiso submitted that the expiesive supttiiers Cnntinee tn act in a cencerted manner to reeést quaiity centre! benchmertts far '2 #9 .» exnie:-We suppiies. Each tn' thefﬁ :

) 9 it 3 L<>\..;§-Q -' ¢ imnected mmpetitien in the§i§*§§.rk affecting the ieveé af cempetétixm, teehnitai deveiegsrment E3.ﬁd"b€3f1ef§%S tar the infarmant cempsazw and its ukimate consumers. Accerding ti) énfarmant, the negative impact an its business aiso §m;3as:t5 its preciuctian cf coai and its consumers, which, ta a great extent, inciude entitées in the infrastructure sector {Ls-2., {sewer generation and steei production}. Given that it £5 amengst the iarger ceai producers in mdia, a negative impact an these vitaﬁ §nfrastru<:'tu.re sectors wouﬁd be detrimentai for she ::m.mtry's ecemmy anti cieveﬁepment as a whoie. Fee" every day that it does eat gsroduce coeﬁ, it suffers ioss m' appmximateiy Rs. 113.95 crore. This makes it abundantiy dear that there is an AAEC caused by the actions is"? the expiosive suppiiers.

7.3."? The informant has submitted that any dismptiztm in mining, preductien and the suppiy ref COS}? to the éndustries. as ea resuit of repeated iiiegai aztoiiective boycett by the constituent members ef the im'armant can have a severe adverse 'feiiowazan impastt im the ecanamy as a Wh03£3 since adverse impact an mining and §3radur:i:§an 01' C03? has a significant spﬁiaver effects on varieus ecenamic asctivéties in the country.

7.3.8 Accoreciéng ":0 the informant, there exists unequivo<:a§ and mherem:

evidence that expéesive suppiiers and/or their trade asse::i:»1t§mn were and stiﬁi are esngageczi in conduct which was rzﬁeariy in vioiation ef the semen 3 :31' ,_.v.........,

-.--

<~" ' ¢x""'y . 'V 'i*'€§t§%\€§ME£*§i'%:§ 119 Sased upen argumants advanced as afsresaid'. the informant has submitted that the iianmwéssicm must reject the €}€3's conciusians, find tha-

exgaiasﬁve suppiiers andfor their tradz-2 associations guﬁty of entersing into anti~carm0et§téve activities in viaiatian (1%? the Act and Empase gevere V penaitées an them.

Seaman surf the temméssim

8. The Ccsmmissim has carefuﬁiv gene thmugh aiﬁ the materiais anti evidences avaiiaéﬁe cm record and has aisa C0ﬁS§C§€i"Ed me written and ma?

arguments sf thé informant and the Gppezzsite Partéas acivanced timing the pmceedings in the cage.

8.1 "The Commissiztm nntes that the infarmant pmcures expicssives of different categerieg and Qther r'e§a*I:::~:d materiaﬁs fmm the expiosive suppiiers thmugh a pmcess of apes': temier to uperate itg Upen Cast we} and Unciergmund {US} mai mines. it enters inn) a system 9*? Running Ccmtmcts {RC} with guccessfui bhdders far the supgriy of expiasives at a specified price for a specified period. The aﬁegationa in the cage basicaiiy reiate in we broad issues, nameiy, a) fixaticzn ax' bid price of expiasives and b} stapgage of s3u;}pI§esA or attempt to Simit t 3 x the exp§a:a:ve manufacturers inferment it has aise been aﬂeged that the asgeciatiens ef the expiesive Esupgnﬁers have em been active in such activities.

issue for Qeterminetﬁee 8.2 in View of ebeve, the issues that arése fer determinetien $3: the case are esunden

a) Whether the exeiesive suppiiere have Emzéuiged in fixaﬁen :3? hie erices under an agreement as has been eiieged in the infe:*ma;tie»n?

b) Whether the expiosive suepﬁers under an agreement 3130 have engaged m the act :3?' cemzrcdiing and éimiting the suppiy of expezssives me the informant ccsmpany?

:1} Whether the expieshre sugzapﬁiers have caused manﬁpuiaiﬁon ef the hédéing pretees in contravention ef the pmvisiees cf seetien 3{3) read with section 3(1) caf the Act?

ﬁseue 1: Whether the expéeséve sueeiiers have induiged En fﬁxeﬁen ef bid erieee under an agreemeet as has been eﬁeged 3:: the Iénfermetiee?

8.3 The Commesien notes that facts ef the case reveaé that the expiesive sueeﬁierzs had submitted identicaé bids in 'the tenders during the ﬁnanciai abuse :23? dem§nance (section 3 er sectien -:1 of the mat) were netiﬁeci eniy with effect frem 29.05.2089, EEG has eencﬁuded that the ante eerteénieg to the years 2835-06 waxed not get cevered within the ambit ef the eat, more se when such acts de net eentinue is he in effect after the said enfercement pecwisiens get netiﬁed.

8.4 "She iefermant in its ubjectioes its the findings G? Di': hag sebmeted that severai cf the bidders have em quoted ideetieei prices in their bids fer the years 2934-85 anti 20i35~0?, which shows that there was certeiisation in the years. other iS§'£3E'% 2{3GS~Ct6 eise. Further, thevbid prices fer the years 200?~GS and 2QOS~09 were within ciese range of each ether which estebiishes that the exptesive suppiiers were not making pricing decisiens in enindeeencient manner.

85 The Commission on the basis of the records ebserves that the bids €.'{E}O'E€'t'.'} by some ref the expiosﬁve mamzfecmrers inciuding the Gppesite Parties were inrieed identiceé fer the years 20€34«GS and 2€}06~0?, apart fmm the year 2005-05 as repented by the DG. However, the detaiis submitted by the infermant reveai that fer the years 2089-88 and 2Q{)8~{)9, there was a variation in the rates {meted by the apposite Parties.

8.5 The Commissien further t3bs;e}x;.4'w§_f*;i5"

!'¢@:'\ I .3.

between the quates ef expieesiee \.i:.3\\

5.?" e ;

K {)9 was; to the tune of Rs. 100 ane ﬁn some cases it was even show'; Rs. 290$ e per MT. Thus, the hid emcee equated by the expiesive suepiiers were not Eeentﬁcei during these years. There is eise ne evieence on i'E{:{J§'i_:§ w§1§<:h suggests meeting :3'? ménds or an agreement te keep the béd prices doses"

with each other. The infermem: has aése net seemiﬁed evidence of any agreement or undergtandieg ameng the exeiesive manufacturers with a purpose to melnieumte the price 015 the ﬂies fer 2€)€}?~G8 :-me 2€.'}{38«€39.,

8.? an the basis of eferesaid, the Cemmissien heids that there arena evidences en recerci to estabﬁish that the exeﬁesive manufacturers had submitted ideneticaﬁ bids or had submitted near to identicai price bids under an agreement te manipuiate the eid mites cétzréng the years 2:3{'3?'«{38 and 2908439.

8.8 However, as far as bids fer the years 2332:}-£35, 280S--£38 , 2{}G6m0? are centerned, the Cemmissien absentee that since the bids queted by the exgaﬁosive sepeiiers were §€;ientice¥ , ﬁt is ciear that they were net taking their deecisiens in an indepencﬁent manner and there wag meeting ef mind emerge aié 0"? them to manipulate the pr0<':e5s of bidding and fixing the bid rates.

"as-

,o .~ '.

However, ei§ these years are prior te:_§1e_§i_a3:te ex? net'ifiz:a'tion of semen 3 and 4 (2e.e5.2ee9}, section 3 and 4-' 29 3.9 The Commissicm notes that the thtetm:;tht has bmught forth certain §etters wﬁtten hy the expitzsive manufacturers ta hrihg out that even post 23.85.2039, the exptosive mahtsfactttrers were mﬁtectévtziy engaged in determination of bid price for suhphz at expihsives the the informant.

8.10 On the itsue cat the ccﬁitscttve fixation at prices post 20.05.2033, intarmaht has drawn attehtien towards the latter dated 1.3.1{}.2t'}i3§ written by the EMWA to it tn supphtt that the explosive stzpptiers were setting prices far suppiy hf exhiesives and aﬁsc setting other terms of suppties in a caitettive manner. The Comtmissmn has game thrcugh the contents at the said ietter carefuity, which has been written by EMW!-'x ta the Chairman at Ctt {the §nf:'::tmaht).t The subject matter of the ietter happens ta he issues misting ta orvgoihg mhtract for the suppﬁy ch' expltzsives for the period 2038-11.

8.11 The Commtssion notes'. that the afaresatd iettet indicates that in terms at Nhtice inviting Temrierz". issuad in Juiy ZGDS, tender for stsppiy of exptiasives was ta he far a period of three yearstéowewar, the tender was going ta he short chjsed and the texhtoséve suphh»:-2t'5 were mncerned with the hmposed measure as they had htaiit up suﬁtcieht infrastructure capacity .»-r-F ta cater tn the ccerhmitted quapjtg mentienee that issue et new tender weuid be detrimentei t0 the interest of the explosive sugapﬁiers as weit es the Enformeet.

8.12 The expéesive memzfeeturers aise agreed to amend the eriee verietiee cﬁettee and 3553 review the prices fer the sewed year at the eerttretzt te mutuat cemfert ef the interment and the expiegive seeetiers. These eeecerns were expressed by the association through its Better stated 13.1€3.2QD§ which eise made an aepeai te eati the members of the associetien fer a diseussien 30 that the issues reiating te Nottce inviting Tencier some be sorted eut.

8.13 The Cemmissien observes that the afereseie ietter from an aseecéetien is not indicative at fixtng a etiee fer seepiies in a contract en behaif at the imemizzlers. it enty ertteuiates the grievances et exptostve memtfaeturers and eise that the prices under tzentraets ceuﬁd be reviewed as per mettseﬁ comfort at the interment and the exptestve supptiers.

8.14 The Commissien observes that the informant is correct in its contention that trade esseeietien; stmuéd net asseciete Etseif wéth the tiecisiens on prices en eeheif at the members. Hewever, it is not that the members had met using the ptatferm at the asseciatien te arrive at a awarded. The §ssz,:es raised in the instant ietter reiate in eieuses of N3'? in respect of eariéer <:ontre~cts awarded 13:: the expmsive suepﬁiers and acceptance 8? prices subject is cemfert of the Enferment and the expiesive suppﬁier, apart from acceptance ef price variatien cieuse w§*:§ci'2 ceuid have meant ﬁesser payments in the suepiiers in case of faiﬁng input prices.

8.3.5 The Cemmissien aise eizaserves that the afes*esa§ei facts do eat substantiate that the associetiee was engaged in takéng 21 tiecfisien to ﬁx bit} rates. The ietter dees not bring ferth anything in suggest that the expieséve suppiiers were using the piatferm of the esseciatien ﬁe determine bid prices secreﬁy, ciandestineiy and witheut knewiedge ef the infermant. The Eetter 03' the asaocietéon is mere about getting set centractuei matters hetween the Enfermant and the expmsive suppﬁiers in respect of cmgeing contracts.

8.16 in vﬁew of eforesaédi, the Cemmissien heids that the Eetter «feted 13.18.2089 as such cennei: be said te be an evidence to estabﬁish that the expiesive supgzsliers tézreugh their a$so<:§et§en~ EMWA had ce§§ectEve§y agreed to fix prices fer suepw of expiosives 'to the detrireent ef the Enferment within the meeneing ex' sectien 3(3),}-efi¥§§e~ﬁe;§t.

ﬁssue 2: Whether Ehe exgaiaséve supmiars under an agreement aim have engagecé in the act of centmiﬁing and Eimiﬁng the supﬁy cf expioséves in ma Eraformant mmgamg?

8.1?' The Commissistm hates that BS in his report an' Envestigatécm has aiso submitted that the expiosive szspgaiiers apart fmm fixing bid rates had aiso smgzsped suppiées of e+xp!os§ves tn the informant far cettain days during the year 2085417 between 12.34.2096 and 16.04.2636. Easeé upan 393531535 of ' detaiis submitted by the infcermant company, 36 has comtiudeci that certain nrcfcices% far smppage of supphg of expﬁosives were §ssued by the expiesive ' suppiiers and suppiy was aiso disrupted during the periceci. it has been noted by the D8 that one of the suppiiers ---= Endian Ex;3¥s:3sEve.s Limitetﬁ haci 3353 admitted the fact 133° stopping the suppﬁies ta protest against the uniiaierai amergdment sf penaity ciauses based upon weighted average gmwder factar.

8.18 On the basis of facts as raported by {K3, the Commission Gbsewes that game cf the expiasive suppiiers. had acted in 3 cancerted manner to stamp the suppﬁy of expiosives during the peréad 12.84.2006 ta 15.84.2086. H::>weve;', sinae the gzamvisions of sectian 3 were natifieci oniy in May 23%, EVER if the bidders acted in 3 Vccsncerteci manner in Finamziaé 'Year 28G6~{}?, the same act of ccantraﬁing and Ein1§tE:§%;'§§pg c § __ ggr 1:.

\'.J \ 8-19 The Commisaian notes that ta supgort its mntentien that the extzmstve suppiiers had induiged in the act at caﬁective gtoppz-age at sumzsiiest at issuing coiiective threats ta srtep suppiias evtsn after 2(}.ﬂS.2Q{}9, since when the enfcrcement provisions of the Act came Ema effect, the informant cmmpany has submitted as an evicience certain ietters Egsued by it and étt subsidiaries ta the expiosive suppiiers and aim iettets tram certain expiosive suptzaiiers ta the infatmant ccmgaami and its sut3sic¥iar§e3., The informant has aist: submitted that supgaiies under the tmgoirzg contracts had been quéte erratic which $h0WS that the expiaséve sutmiiers were acting miiecttveiy.

820 The Czammissimt has catefutty considered the cantetstisns of the interment cm the issue. The Cemmission states that the infcsrmant has submitted Eetters issued by the infermant cmmaany and its subsédiaries in certain mantths of 2819 (March 2;€310«£ut1y 2510) to the expiosive sugapﬁters which indicate that the Essue under consideration in 3!? such ietters was ncm-- suppiy at aikacatteoi quantity of expiosives as per Letter at intent and for as twat Running Csntracts on different dates' The infmmant through theta ietters had asked the incéivitﬁzr-1% suppiiers to make the suppiiea of the tequﬁaéte quantity ft-ziiing which thg informant might restart ta take action as .-*"':'Mr §\.\ \ no evidence ta stupmlxrt that \ 'per the term.s 0'? the RC.

V,tpiie:§«ts:'f§der an agreement._.. .

5:4 *3 ' ' ' 8.21 Thus, the Cemmisgion ehservee that ii is net a cage where the exgiesive suppiiers were acting in cancer: it: iimit suppiées in the market in awe? te manépuéate the market gserice af expisosives. it 33 aise a matter eef record that same of the expiosive suppéiers had aiso suppéiecé more than 90% as'? the queamity as srtipuiated in the mntract. Moreover, in case of short sugpﬁies, the infermant mmpany was free to: take asztiens as per crcmtractuai arrangements as is eapparent from the ietters ed' the infermant ané its subsidiaries in which it was menticmeti that faiiure to suppléy the stipmated quantities week} Read? in making risk purchases and takirzg ether acticms as per terms 0*?' RC5.

8.22 The Cemmissien on the basis cf the aforesaid observes that the ietters reiied upen by the Enfermant dc: net substantiate ita aiiegatitms ef ceiiective action on the part 9%' expﬁosive suppiﬁers to limit suppiies in the market in the eeriaci a5 above, with a mew to manipuiatee the bid price which couid have been said to be vieﬁative ef any of the pmvisiens 0'? section 3(3} of the Act.

8.23 The Commissmn notes that the Enformam: has aiso reiied ugztacm ietters dated 11.13.2318 and 13.10.2010 written by three exgsieaive sup§::E§ers ':0 support its aiiegatﬁens that the {)g3;§;:§<7;:::~*??'§7\-§M"E§='¢:ives had acted ceiéectiveﬁxg which :5»! ' these ietiers, the expiesiive suppiieis have drawn attentieri. ef the informant company tewerds instnietiene irem Petreieum and Sxpiesive Qrganisatien (FEES) regartiirzg ﬁeiivery of expiesives aed reiated security ciuring transportation of exeiesives. The expiosive manufacturers threugh these ietters had informed the informant tiiai: the guicieiines were so stiff that it wouid be difficuit te centinue smppiies without cemmitting any viciietiens, indicating that if the conditions were not made practical they weuid be ieft with :10 eetion but to gusgneeci suppiies.

8.24 Given the bec:.¥<gres.md in which these ieitiers were written, the Commission feels that it is pesisiizuie that the expiesive sisppiiere might: have .

censuited each ether, being a cemmon issue faced by them. Hewever, there is me indieation in these ietters. that the apposite eertiee nemee in the infermetien were eeiiiserateiii iimiting the suppiies in the market. There is no evidence that they have restricted their euteui: with a purpose to make profits. in fact, n0n--suppiies by them weuid have made them faee adverse consequences far not fciiiewing the centractuei ebiigetieris. Therefore, the three identicei ietiers expressing C{3¥'i{3E3i'i"iSi over PESC3 guieeiines de not estebiish any anti-tzompeiitive agreement within the meaning ef the sectiszm 3(3) of {he Act.

2011 by the expiosive say that the expioaive jz.\_'\.

mamrfactureris reiiee upen fag /.

manufaeturers ::e§§ea::'c§ve%v had issued tfrreats site'? stepgsing supeiies ta {$1-e informant are aise net indicative of any an'c§~c0mpet%i:Eve agreement amcmg them with a vﬁew ti: {Emit suppiées in the market fat: earn abnermai. erafits. The Ceimmissirm ncstes that these §etters_ have been written cirawirzg attention of the informant to man out certam pmhiems ewith the prﬁce variation forrrmie setieuiateeé in the mntracts. The exgsﬁeséve suppiiers thmugh these ietters had made retguests fer' Encﬁuding Ammomum Nétrate imiex in Pi"§{:€-3 Vaadation Formuia: in the tenders so that change in ;:>r§::e5 {sf imprwted Ammanium Nitrate come! he accounteci far. The iiemmission accerdingiy observes that these ietters as such (is net establish any an'c§~ campetitéve agreement among the expﬁosive suppiiers in Weietien of section 3(3) of the Act.

8.26 Consiciering aif the facts; avaiﬁabie an recterd, the Cemmissézm hams whﬂe there was a concerted ectieen cm the part cf expicssive suppﬁiers to miieetivety stop suppiies 'ice the informant company during certain days of 2i"3{}5«G?, there is he evidence :31' such £:0§§{~3ctive aetien in ether years as has been aéieged by the infermant. Hewever, sémze the enforcement provﬁaians :3? the Act were nest in force during that perieﬁ, the expensive sugapiiers aarmai: be heicf in <:entraven*t§<."m sf section 3{3){b) of the Act.

\ _~.-\ isgue 3: Whether the expéeséve geppiiers have caused meniessietien ef the kidding emcess in eentraveetiee of the emvisiens cf semen 3{3} read with sectien 3&1) oéfthe Act.

Eeyeett ef ee-reverse auction 8.2? ﬁne cf the evidence produced by the infermant to substantiate its aﬁiegaticms that the expﬁosive suppiéerza have acted ceﬁeciziveéy in order is inﬂuence ihe process 01' bidding for seem: of the exeiosives is their act 0? coiiective boyceti: crf eéectmnic reverse aucﬁoen conducteci by the infermaet company during 4"' «-- 8"' January 2010, As regarcis eiiegations ex' ceﬁective beycett ef reverse auctien heki en 4*" and 5"' ienuary 2910 for buik anci cartridge expiosives and on 6"' January 281$ fer accesscsries iike cietcmeters and cast hamsters, the Qommissien mates that in accerﬁance with a decisien taken by Beard :3? the informant company in its meeting hem' on Q9.€)§.2E09, fresh tenders were ﬂoated for procurement of expiesives fer the year 291E)»

13., Te::hne~comme:'c§ai bids were epened in this respect in November 2989 and after scrutiny ef techncwcemmeercial bids, bidders were invited he take part in reverae aiueﬁeen heid an 4"'--6"' January 2310. mtheugh 26 eiigibie stagmtiers cf buik exeiesives and 26 eiigihie suppiiers fer cartridge expimsixrese and accesseries participated érz mock bids heﬁd cm 31.12.2333 to {32.i"31.2{33_{,'}3 except fer twe,name§y, Shri Krishna Expioséves and Preméer Expiesiveg . we Limited, rm: ether exeiosive 3::

named in the intcitmatien, garticipated in the eiectrimir: raserve aitiﬂtitiii mates: tar stippiy at butt: expiosives.

8.28 Fear the reverse auctiuh heici an 5"' ianuari; mm, F30 hicider otteired the price bids. in the auttimi heid on 55" of ianuary aithaugh 3 iargt: number at biciciers cffeied price hicis far tietmiatats and cast hamsters, for other teiated items no body participated. The biciciersz iagged in the System, howeveii. they did not after the mica bids.

8.29 The Commission notes frijm the recciriiis that iicehe at ten firms mentioned in the ii'}i°i3i'i'i'iatiOi'i participateﬁ in the reverse auction heid an Aim and 5"' at January 2010 for stippiy at izuiisz and cartritige expicisivesi 8.30 The expiosive Sti'§3§3§§et'S infotmeci the sttaiiagemetzt at the informant company that they were hesitant ta gatticigate in the atictimi since as per draft mite issued during that perimi issued by the Ministry at Home Affairs, Government 0'? india, they were apprehensive that there wiii be huge cost incidence an account of the price at Ammnnium Nitrate anti they wanted same time befare they couici anaiyse the whoie matter in Oftfiﬁf ta participate in the reverse auction.

8.31 The tecottzis aim teveai that the supgpiiers aptzmacheci the officers at the iinfizirmaht comgaaity in writing to: say that the tzeiiihg price was inmtrectiy fixeci which had matte bj_,d£§' Q\§C0i'i0i'i'iiC8§, The 't'2i2'\.'€3 supgsaiiers , 4-9' .~"' January 281$} exeiainéng why they did' net partﬁcipate in the aforesaid reverse auctien, The fact that the béeders wrete icienticsi ietters reveaé 3 meeting of mind among them. Later on, hewever, the bidders pa rticieated in the reverse auctien heéd en 15"' January $10. in the said auction, the bid prices feiﬁ substanﬁaiiy beiew the eeiiing price, which estabiishes that the argument :3? bidders that they hazi not euated during reverse auctien hekai during 4"' «am January 293.3 was neat valid.

8.32 in View ex' eferegaid the Commission obsewees that there was a cencerted aetien ameng the Oppesite Parties Na. 1* 18 earned in the information not to participate in the reverse auci:§e~n he-id during 4" « 5"' January 2010 for snapehz of buﬁk and cartridge exeiegives. This act ef exeiesive supeiiers has ceegeci coﬁiective boycott ef auction gareeess and manipeiatien of the emcess cf eiddieg which is in vioiaﬁen en' the ;3revis§ens 3? section 3(3){h) 0%' the Act.

8.33 "Fhe Cemmissien hoids that the afereseid act ef the Qpeesite Parties Nol is 19 named in the ieformaticm has resuited into vieiatien of prmrismns of section 3(3){c¥) of the Act besides the erevisions of seetien 3{3} {2}} of the Act. The provisions of sectﬁen 3{3} ef the Act state as under;

" {3} Any agreement entered inte between en{'€r{m'5e.5' or eesczcicztians of enterprises as" persans er¢g§§_e_§1\§§ens 9}" persons er between any person and enteerprise we} $9' an, er a'eci.sion taken by, CW}? assecfefien af enterpr§§e§g;3£§T' ' E -V :..

( engaged in icientiees' er simiier trade of genes car premise 9}' services, which----

{(1) ciirectfy er indirectiy determines purchase er safe prices;

(13) iimite er controls prozzfucticm, suppiy, merrqeizs, cechrriccsi deveiopmerec, investment or ;3rev§5ien of serzricee;

(5) shares the market or seuree cf preductian er provision ref servﬁces by way af allocation 0}' geogrephicei £If':'3G of market, er type of geeds er services, er number of cusromers in the market er any other eimiier way;

(cf) direcciy or indirecfly resuits in bfc? rigging er coifueive eidﬁing, shcifi be presumed to have an appreciable adverse effect an competition:

Expienecion.---For the eurpeses cwf this subwsectien, "Mei rigging" means any agreement, between enterpmes or perscme referred to in screw sectferz (3) engaged in icientieai er simifer preducticm or freeing of goods er previsien of services, which have tfwe effect sf eifmineting er reducing cempetitfcm for hide or edversefy affecting or menipuieiing the process fer bidding. "' 8.34 The acts and ceriduet ef the Qgaposite Parties of beycett 92° ereverse a:.2c't:i3=;m when seen tegether with the east ceneuct csf quoténg iciemicai rates and centreiiing the suppiy ea? ex.p%os§ves in the years 200$-05, 2€)€}§-€35 anci 2G0§»{}'}",. c§ear§31 estabiish that they are with a View to menipuiestirzg the process cf bidding in vieiatien of section 3{3){d} ef the Act. :35 a resuﬁt ef the amen of the expiosive suppiiers, the ereverse aczcticm had to be rescheduied, thus, adverseiy affecting the bicidinrg prrocess. Such acts of the exrpﬁesive sumafierg have 3550 CaUS{'f§;§§'°t§'ﬁ'?Qv§¥-'§?1'7§ ppiies cf the expiosives to the 4» infermam': cemparay in contrav{e"'§§§é§ $2 of section 3(3){b} of the § Act. 2*' Q. The afaresaid act and ccanduct :3'? the CPS has aisa caused Appreciabie Adverse Effect an Competition in the market since the apposite Parties No. 1 is 13 named in the infarmatéon cazsmtmi about ?5% of the market share as per data furnished by the énfarmant and by boycotting 3 cempetitive bidééng pracess 3 ﬁarge part :23? the mzarket has been fereciased far a fair and free competition. Further, not oniy mrnpetitima has been advemeiy effectec¥ but interest af the infarmam'; as a ccmsumer has aésc bessm harmed since boycott of auction process has caused cieiay in ﬁnaiizatian 'cf contracts through a pmcess of price dismvery and has resuitantiy iimited sugpéies of the exgaiosives in ccsmsraventiczzn mf provisions of section 3{3}(b}'::o the suppiiers.

16. Grass" under sectien 2'? af the Act 13.1 The ﬁommission has Vfmmé the act :31' bmycett 0f e~r:=:vea'se auctien by the expinsive suppéiers as violative of the pravisiens Q? seiztéan 3(3)(b) anti section 3(3) {Ci} of the Act. The infarmant in the Enfmmatimn has; given the details Q'? @5133! ten expiosive 5upp§ie:*s as the comzravemhg. parties. The :::.¥e%;ai§s of 3%? mikes" parties who were technicaﬁiy cguaﬁified but ciﬁd not submit price bédg during reverse auction heid ciq ¢.\->- ,, ring 4"' ---- 6" January 2310 are me}:

\~.,\\(\ take actien against the ten parties named in the §nfs:>rmati0n for cemtravention 0%' the pmvisions cf the Act.

10.2 Accmjciingiy, the Cammissicn decides ta impasse gaenaitées at rate «:3? 3% cm average on' three years tumcwer an the ten cagzepczsiie pa mes named in the §nfc:rmati0n under section 21%) cf the Act a5 under;

' Turrmver in year Turmwer in vs:a.r Tufnovar in war Average of three 5 % of Ended on ended can isnnieﬁ an years Turnover penaitv cm 31.03.2668 {in 3LQ3.2D09{in Rs.) 31.€}3,253.0{in Rs.) {in R5,} average of

35.} three years turnover {in Rs.) 1 (mi? Gil 3,332,152,006' 3,958.33-'£008 1ﬁ,EE«6,5E'§z2,(}DB §,642~9,21ﬂ,G0i) 339,-:??6,3f)0 Corporation Ltd 2 H3333 tndustriai 358,645,748 'IiS.4{'!6,.6S6 S72,S9i%,3E? 531,549,098 15,546,453 Easpiasisms Ltd 3 Snéar' industries 1,822,9DE!,ODﬂ 4,A$9Ei,91t3,Gi3§3 $,(l20,24.S,GD§} 3,,?81,01§,§33 1i$,4'Z30,58G j Ltd 4 ' Blezstec india 311,3'5".',183 313,891,395 223,939,659 283,{i32,?¥¥:3 $399,882 mrivate Ltti Ea inciian 3,100,398,990 3,§12,314,D§8 3,828,568,550 3,'514,1G4,i§G6 108,423,133 Escpiosives Ltd. ' 6 Emu! Tait 'Pmate 83?',850 1,332.49-3 Ee3?,3&1 53,52,532 .'ES5"fEe Ltd 7 aegenesizs 460,270 333,435,339 521,593,379 a,zo1,aae,5::» 9,534,409 imiustries Pm) rm.' 3 Biack Diamonai 55,793,339 3Si1,??°:',(!0£3 519,423,003 1 313,301,001) 9,393,830 Expiasives Ltd.

5: technuk masts 5«3,3n6,ns1 Campany 59,305,031 1739, 132 " lndﬁa Ltd' Amaigamated 18 Keltech Energies $2-5,S«5.&'2,€}8@ 1,.C¥§9,23S.5€s'ﬁ 31,1??,0?Q Ltd.

18.3 The infmrma's:§an regarding financiais of 'aegenesia imiustries Pvt. List, Biack Qiamond Expiasives Ltd. anti Tsechna Bﬁasts. indéa Ltd. has been obtained fmm Ex:¥C»%-=21 amaze they were mt praviéeci by them in course m:

moceeéings. Techm Biaszts Encﬁa Egimited has been amaigamateci with Regeraa-sis ¥r:dustr§e:5 Ltd. xevith effect {mm January 2010. Detaifs as avaiiabﬁe tiii 2809 have been taken far the pu moses cf ﬁts turnaver.

13.41% The Cammissiatm aiso direct: the Gppasite ?arties to 'cease and desisst' fmm engaging in practices 02' manipuiating precess cf bidding in any manner.

11. Secretary is directed its convey the decﬁséon {sf the Ccmmissiura tn the Partieg aazcordingiy.

5:§sf.'§,2'..

?V15é?£3f£§3er {E};

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