Competition Commission of India
In Re: Cartelization In Tender No. 59 Of ... vs Lahs Green India Private Limited & ... on 31 May, 2018
COMPETITION COMMISSION OF INDIA
Suo Motu Case No. 04 of 2016
In re: Cartelization in Tender No. 59 of 2014 of Pune Municipal Corporation
for Solid Waste Processing
1. Lahs Green India Private Limited
B-508, 5th Floor, Palash Upvan Gowand Baug
Pokharan Road No. 2, Thane West
Maharashtra-400610 Opposite Party No. 1
2. Ecoman Enviro Solutions Private Limited
Flat No. G-1002, MSR Queens Town
Survey No. 3876, Udyog Nagar, Chinchwad
Pune- 411033. Opposite Party No. 2
3. Fortified Security Solutions
A-10 Shreyas Apartments, Opp. E-Square
Shivaji Nagar
Pune- 411016. Opposite Party No. 3
4. Raghunath Industry Private Limited
3, Pushpanjali Apartment, Plot No. 1162/4A
Shivaji Nagar
Pune-411005 Opposite Party No. 4
Suo Motu Case No. 04 of 2016 Page 1 of 29
CORAM
Mr. Devender Kumar Sikri
Chairperson
Mr. Sudhir Mital
Member
Mr. Augustine Peter
Member
Mr. U.C. Nahta
Member
Appearances:
For Opposite Party No. 1 and Mr. Irfan Ahmed, Advocate
Shri Saiprasad Sharadchandra
Prabhukhanolkar
For Opposite Party No. 2 and Mr. Vikas Mishra, Advocate
Shri Bipin Vijay Salunke
For Opposite Party No. 2 and Mr. Vikas Mishra, Advocate
Shri Bipin Vijay Salunke
For Opposite Party No. 4 and Mr. Vikas Mishra, Advocate
Shri Vijay Raghunath Salunke
Suo Motu Case No. 04 of 2016 Page 2 of 29
ORDER UNDER SECTION 27 OF THE COMPETITION ACT, 2002
Introduction:
1. This suo motu case originated from the information received by the Commission
in Case No. 50 of 2015 disclosing co-ordination amongst Lahs Green India
Private Limited, Pune (hereinafter, 'OP-1'), Ecoman Enviro Solutions Private
Limited, Pune (hereinafter, 'OP-2'), Fortified Security Solutions, Pune
(hereinafter, 'OP-3') and Raghunath Industry Private Limited (hereinafter, 'OP-
4') to rig the Tender no. 59 of 2014, which was not being investigated as part of
Case no. 50 of 2015, floated by Pune Municipal Corporation (hereinafter,
'PMC') for Design, Supply, Installation, Commissioning, Operation and
Maintenance of Municipal Organic and Inorganic Solid Waste Processing
Plant(s) (hereinafter, 'Tender no. 59 of 2014') in contravention of the provisions
of Section 3(1) read with Section 3(3) of the Competition Act, 2002 (hereinafter,
the 'Act'). Hereinafter OP-1, OP-2, OP-3 and OP-4 referred to as 'OPs'.
2. In Case No. 50 of 2015, OP-1 i.e. Lahs Green India Private Limited filed an
application under Section 46 of the Act read with Regulation 5 of the
Competition Commission of India (Lesser Penalty) Regulations, 2009
(hereinafter, the 'Lesser Penalty Regulations') on 04.08.2016 at 04:18 p.m.
Further, OP-2 and OP-4 also filed an application under Section 46 of the Act
read with Regulation 5 of the Lesser penalty Regulations in Case No. 50 of 2015
on 05.08.2016 at 12:40 p.m. and 02:32 p.m. respectively. In their applications,
these OPs disclosed cartelisation not only in tenders that were subject matter of
investigation in Case No. 50 of 2015, but also in Tender no. 59 of 2014.
3. With respect to Tender no. 59 of 2014, it was disclosed that with an objective to
increase the probability of OP-2 winning this tender, Shri Bipin Vijay Salunke,
Suo Motu Case No. 04 of 2016 Page 3 of 29
Director of OP-2, made an arrangement whereby cover bids were to be placed
by OP-1 (in which his close friend Shri Saiprasad Saradchandra
Prabhukhanolkar is a Director) and OP-3 (of which he is the Sole Proprietor).
Further, since OP-3 was not engaged in manufacturing of composting machines
at the time the tenders were issued by PMC, Shri Bipin Vijay Salunke had
requested his father Shri Vijay Raghunath Salunke, a director of OP-4, to appoint
OP-3 as an authorized distributor of OP-4 in order to make it eligible to bid in
the aforesaid tender.
4. After perusing the information, the Commission was of the opinion that prima
facie the OPs appeared to have engaged in practices which directly or indirectly
resulted in bid rigging or collusive bidding in Tender no. 59 of 2014 in
contravention of the provisions of Section 3(3)(d) of the Act. Accordingly, the
DG was directed to carry out investigation vide order dated 11.08.2016.
5. Subsequently, on 20.09.2016 at 03:00 P.M., OP-3 filed an application under
Section 46 of the Act read with Regulation 5 of the Lesser Penalty Regulations
accepting that it had submitted cover bid in Tender no. 59 of 2014 and provided
documents in support thereof.
Profile of the parties:
6. 'Lahs Green India Private Limited' i.e. OP-1, is a private limited company
registered under the Companies Act, 1956 with three directors, namely; Shri
Saiprasad S. Prabhukhanolkar, Shri Saili Prabhukhanolkar and Shri Gulab
Pandurang Jadhav. It is engaged in the supply of solar water heating, lighting
and water purifying solutions and equipment for residential and commercial
applications. It also specialises in zero waste management, in which wet and dry
garbage is treated which results in zero dumping.
Suo Motu Case No. 04 of 2016 Page 4 of 29
7. 'Ecoman Enviro Solutions Private Limited' i.e. OP-2, is a private limited
company registered under the Companies Act, 1956 with two directors, namely,
Shri. Bipin Vijay Salunke and Smt. Sulabha Vijay Salunke. It is stated to be a
leading company in the field of decentralized solid waste management having
an advanced technology in composting. Furthermore, it claims to have
developed a unique solution for decentralised solid waste management by its
composting machine named 'Foodie' which converts organic waste into compost
in 24 hours.
8. 'Fortified Security Systems' i.e. OP-3, is a registered shop and a proprietary
concern of Shri Bipin Kumar Salunke established under the Bombay Shops and
Establishment Act, 1948. It is engaged in the business of sales and services of
electronic security systems, health and medical equipment etc.
9. 'Raghunath Industry Private Limited' i.e. OP-4, is a private limited company
registered under the Companies Act, 1956 with two directors namely, Ms. Sonali
Sahasrabudhe and Shri Vijay Raghunath Salunke. It is engaged in field of solid
waste management and manufacturing of composting machines since June 2013.
DG's Investigation:
10. The DG examined cartelisation and bid-rigging/collusive bidding by OP-1,
OP-2, OP-3 and OP-4 in Tender no. 59 of 2014.
11. To investigate the above, the DG collected evidence from various sources by
issuing probe letters to the parties and third parties including telecom operators,
banks and PMC and also recorded the statements on oath.
12. With respect to Tender no. 59 of 2014 the DG noted that three entities i.e. OP-1,
OP-2 and OP-3 participated in the tender and OP-2 emerged as L1 bidder with
Suo Motu Case No. 04 of 2016 Page 5 of 29
the lowest bid of Rs. 58,70,500/-. However, the documents submitted by PMC
showed that even though the tendering process was completed, the L1 bidder
was decided and due approvals taken from the competent authority; the final
work order was never issued.
Address and Contact Details
13. On examination of the documents of OP-2 and OP-3 submitted with PMC for
the tender, the DG found that even though OP-2 and OP-3 were separate legal
entities and had bid as competitors, they had a common place of business. Also,
both were being managed by a common person i.e. Shri Bipin Vijay Salunke.
14. Further, the online filing of tender required the contact details of a person for the
bid. On examination of these details, it was found that the phone number
specified in the tender document for OP-1 and OP-3 belonged to Shri Bipin Vijay
Salunke Director of OP-2 and Shri Parimal Salunke, an Executive Director of
OP-2, respectively. The fact that OP-1 and OP-3 had quoted phone number of
another competitor or a person working in the competitor concern as its contact
person showed that they were likely to have knowledge of each other's bid and
indicated existence of an agreement amongst the bidders.
Demand Drafts for Earnest Money Deposit
15. The DG found that the Demand Drafts (hereinafter, 'DD') of OP-1 and OP-2 for
Earnest Money Deposit (hereinafter, 'EMD') were prepared from the same bank
i.e. Bank of Maharashtra, Pune main branch on the same date i.e. 18.02.2015.
Further, the DDs furnished by OP-1 and OP-2 were consecutively numbered.
16. It was noted that the bank accounts of parents of Shri Bipin Vijay Salunke were
used for preparing DDs for EMD amount of OP-1, OP-2 and OP-3 for this tender.
While the bank account of Shri Vijay Raghunath Salunke held with Bank of
Suo Motu Case No. 04 of 2016 Page 6 of 29
Maharashtra was used for preparing DDs for OP-1 and OP-2, the bank account
of Smt. Sulabha Vijay Salunke, mother of Shri Bipin Vijay Salunke, held with
Bank of India was used for preparing DD for OP-3.
Internet Protocol Address used for Uploading Tender Documents:
17. It was further observed that all the three bidders: OP-1, OP-2 and OP-3 had used
the same IP address for uploading the documents for the tender. It was found
that this IP address was registered in the name of Shri Bipin Vijay Salunke,
Director of OP-2.
Call Data Records:
18. From the call data records of Shri Bipin Vijay Salunke, Shri Parimal Salunke
and Shri Saiprasad Saradchandra Prabhukhanolkar, the DG found that they had
exchanged more than 100 calls during the period of submission of bids. Thus,
the investigation revealed that the directors/ proprietor of the OP-1, OP-2 and
OP-3 were not only known to each other, but were also frequently in
communication with each other.
19. Based on foregoing evidence, the DG was of the view that the OPs were hand-
in-glove with each other and had engaged in bid rigging/cartelisation in Tender
no. 59 of 2014 of PMC.
20. Apart from collecting the above evidences, the DG also confronted the same and
recorded statements of key officer(s)/ person(s) of the OPs while conducting the
investigation. These statements were recorded after the submission of
application under Section 46 of the Act by the various OPs. The observations of
the DG from the statements of OPs are summarised in succeeding paragraphs.
Suo Motu Case No. 04 of 2016 Page 7 of 29
Statement of Shri Saiprasad S. Prabhukhanolkar, Director of OP-1:
i. On being confronted with various evidences in the matter, Shri Saiprasad S.
Prabhukhanolkar, in his statement on oath, admitted that OP-1 was a part of
the cartel. He indicated the modus operandi and revealed that OP-1 had
submitted a proxy bid to ensure that there were at least three eligible bidders
in the first round of bidding itself.
ii. He disclosed that all this was done at the behest of Shri Bipin Vijay Salunke,
who had requested him to provide documents required for the bid in the
tenders, which were sent by OP-1 vide e-mail dated 18.12.2014.
iii. He submitted that he only provided the relevant documents for filing of the
tender and Shri Bipin Vijay Salunke did all other work including preparation
of DDs for EMD, filing of price bids and uploading of the documents, without
his knowledge.
iv. Further, Shri Saiprasad S. Prabhukhanolkar in his statement also stated that
he did not receive any consideration or benefit for participation in the tender
and it was solely done for the purpose of benefiting Shri Bipin Salunke,
v. With regard to calls exchanged between him and Shri Bipin Vijay Salunke,
he stated that since they had a dealership for 'Foodie', a product of OP-2, they
used to talk frequently about clients and also about the concerned tender.
Statement of Shri Vijay Raghunath Salunke, Director of OP-4
i. In his statement on oath, Shri Vijay Raghunath Salunke, accepted that OP-4
had authorized OP-3 as its authorized distributor of composting machines so
as to enable it to participate in tender.
ii. He admitted that the DDs for EMD for OP-1 and OP-2 were prepared by
debiting his bank account on request of his son Shri Bipin Vijay Salunke.
iii. However, Shri Vijay Raghunath Salunke denied being aware of details of the
cartel and also denied being offered any consideration for the same. He
claimed that he had given authorization to OP-2 at the behest of Shri Bipin
Vijay Salunke. Further he stated that OP-4 had given authorization to OP-3
Suo Motu Case No. 04 of 2016 Page 8 of 29
at the behest of Shri Bipin Vijay Salunke so as to ensure that at least three
eligible bids are placed for the tenders.
Statement of Shri Bipin Vijay Salunke, Director of OP-2 and Proprietor of OP-3
i. When Shri Bipin Vijay Salunke was confronted with all the above evidences
and his statement was recorded, he admitted the existence of cartel and that
Tender no. 59 of 2014 was infact rigged.
ii. He also accepted that the DDs for EMD for the bidders were prepared by Shri
Parimal Salunke on his instructions by debiting the account held by Shri Vijay
Raghunath Salunke and Smt. Sulabha Vijay Salunke for OP-1 and OP-2 and
account held by Smt. Sulabha Vijay Salunke for OP-3.
iii. Further, he disclosed that the IP address was same for various bidders because
the technical and price bid were scanned and uploaded by Shri Parimal
Salunke from the office of OP-2 and the price bids of other bidders were
determined by him.
iv. Shri Bipin Salunke also accepted that requests were made to OP-1 to place
cover bid so that there were at least three eligible bidders and tender was
considered by the PMC.
v. He corroborated the statement of Shri Saiprasad Saradchandra
Prabhukhanolkar and accepted that the facts stated therein were correct.
vi. Additionally, it was submitted that the role of his father, Shri Vijay Raghunath
Salunke was limited to issuing of various authorization certificates and
facilitating the preparation of DDs. Further, he stated that no help was taken
from the officials of PMC in the above cartel.
Affidavit of Shri Parimal Salunke, Executive Director of OP-2
The DG also took into consideration the affidavit of Shri Parimal Salunke, an
Executive Director of OP-2 dated 20.12.2016, in which Shri Parimal Salunke
accepted in totality the relevant portions of the statement of Shri Bipin and his role
in the cartel.
Suo Motu Case No. 04 of 2016 Page 9 of 29
21. Thus, from the evidences gathered during the investigation and the statements of
person(s)/ officer(s) of the OPs, the DG concluded that there was bid rigging/
collusive bidding in the Tender no. 59 of 2014. There was meeting of minds and
co-ordination between various individuals which included the proprietor/
director of OP-1, OP-2, OP-3 and OP-4.
22. The Commission considered the investigation report of the DG on 30.08.2017
and decided to forward the same to the OPs and also to the person(s)/ officer(s)
found to be liable under Section 48 of the Act by the DG i.e. (i) Shri Saiprasad
Saradchandra Prabhukhanolkar (for OP-1); (ii) Shri Bipin Vijay Salunke (for
OP-2); and (iii) Shri Vijay Raghunath Salunke (for OP-4), for filing their
objections/ suggestions thereof and to appear for hearing before the Commission.
On 16.11.2017, the Commission heard the matter. The submissions of the OPs
are summarised below.
Submissions of the OPs
OP-1 and Shri Saiprasad S. Prabhukhanolkar (Director of OP-1)
23. OP-1 and Shri Saiprasad S. Prabhukhanolkar in their combined written
submission, while accepting the findings of the DG and their role in the same,
have contended that the case in hand is an aberration and they have never been
involved in any kind of cartelisation, bid rigging, proxy bidding or any such
activity ever before. Further, they undertake not to indulge in any such activity
in future.
24. OP-1 has stated that it filed a Lesser Penalty Application, pursuant to which it
fully cooperated with the investigation, made full and complete disclosures and
provided all information and documents in its possession. In fact, in addition to
providing disclosure regarding bid rigging in Tender nos. 34, 35 and 44 of 2014,
Suo Motu Case No. 04 of 2016 Page 10 of 29
it also disclosed attempted bid rigging qua Tender no. 59 of 2014, an information
that was not in the knowledge of the Commission.
25. OP-1 has submitted that it provided modus operandi of the cartel qua proxy
bidding and bid rigging in the name of OP-1. It also disclosed the names, relevant
e-mail id, phone numbers, etc. and made valuable contribution in establishing
factum of cartelisation. Further, it made full and complete disclosure regarding
the facts and documents within its knowledge including telephonic conversations
for the period when Shri Bipin Vijay Salunke had requested for the documents,
which was used by the DG to confront other OPs.
26. Further, OP-1 has stated that no monetary benefit was derived by it out of the
entire process. All this was done only as a friendly gesture to Shri Bipin Vijay
Salunke, who assured him that his name was included merely for completing
the qualifying number of bidders in order to avoid any cancellation of such bids
for want of minimum number of bidders.
27. Further, OP-1 has averred that despite making application under Lesser Penalty
Regulations, it was denied the right of confidentiality and the information and
documents provided by it were disclosed to the other parties and through them
to public at large. It is argued that as a result of such breach of confidentiality its
image and that of its director, was tarnished and they already stand gravely
penalised in respect of their reputation and business prospects even before the
verdict of the Commission.
28. Therefore, in view of the foregoing, OP-1 has prayed that a lenient view be taken
and OP-1 be considered for lesser penalty in terms of Lesser Penalty
Regulations.
Suo Motu Case No. 04 of 2016 Page 11 of 29
OP-2 and Shri Bipin Vijay Salunke (Director of OP-2)
29. OP-2 and Shri Bipin Vijay Salunke in their combined written submission
submitted that they have already admitted to their role in the acts investigated by
the DG and have no objection to the conclusion arrived at in the DG report.
Further, they co-operated fully with the DG in the investigation and disclosed
their own role and that of its officers in the alleged bid rigging of Tender no. 59
of 2014. Also, they have not carried out similar anti-competitive activities in any
tender subsequent to the tenders that are subject matter of Case no. 50 of 2015
and Tender no. 59 of 2014. Moreover, they undertake not to carry out such
activities in future.
30. In their reply, OP-2 and Shri Bipin Vijay Salunke have submitted that their
present reply relates to two broad aspects (i) entitlement to lesser penalty and (ii)
procedural and substantive errors in the investigation report of the DG.
31. With respect to the first aspect it is submitted that a bare reading of the
investigation report would show that virtually no investigation by the DG was
required as all the facts and evidence were provided in the Lesser Penalty
Application. The DG had only prima facie evidence of cartelisation/ bid rigging.
OP-2's application made detailed disclosure of precise modus operandi adopted
by it to coordinate between various OPs bidding for the tender. Further, details
of alleged cartelisation including names of persons who participated, nature of
their relationship with OP-2 and its officers and dates when concerted actions
were done was given by OP-2. Also the documentary evidences such as bank
statement of Smt. Sulabha Salunke (Director of OP-2) indicating preparation of
DDs, copies of documents of OP-1 and OP-2 including Affidavits, DDs and
authorization letters, a box containing actual digital keys/pendrives obtained by
Shri Parimal Salunke from PMC for all cover bidders were submitted to the DG,
which were crucial in understanding the cartel among OPs.
Suo Motu Case No. 04 of 2016 Page 12 of 29
32. OP-2 has further submitted that the objective of alleged cartelization was to
ensure that the tender period was not extended by PMC and the bid placed by
OP-2 was considered without extension. OP-2 has stated that it was unaware of
provisions of Competition Act, and thus, inadvertently contravened the same by
setting up other OPs as bidders. It is averred that this was done bonafide as it is
a matter of record that apart from OP-2 no other eligible bidder participated in
PMC tender between 2013 to 2015, despite extension of period of bidding.
Therefore, as such, no actual loss was caused to PMC, nor did OP-2 foreclose
the market to other competitors.
33. With respect to the other aspect of procedural and substantive errors in the
investigation report, OP-2 has alleged that certain lapses occurred in course of
investigation and preparation of investigation report by the DG which adversely
affected the reputation of OP-2 and its officers as well as their rights under the
Act. It is averred that inclusion of entire, non-redacted statement of Shri Bipin
Vijay Salunke in the investigation report of the DG amounted to gross violation
of confidentiality of OP-2 and Shri Bipin Vijay Salunke in terms of Regulation
6 of the Lesser Penalty Regulations. It is alleged that this resulted in actual harm
as the report and the statement were quoted in local newspapers of Pune, which
caused embarrassment to Shri Bipin Vijay Salunke and his family members. OP-
2 has requested that the harm already caused to Ecoman and Shri Bipin Vijay
Salunke be also considered as a factor while evaluating any reduction in penalty.
34. Further, OP-2 has contended that the manner in which the investigation report is
drafted appears to ignore the fact that Lesser Penalty Application was filed by
OP-2 and instead gives an impression that the entire investigation was carried
out solely by the efforts of the DG. OP-2 has submitted that it was incumbent
upon the DG to prepare two versions of the investigation report i.e. confidential
and public version. In the confidential version of the report he should have
indicated precisely how much assistance was obtained from its disclosures.
Suo Motu Case No. 04 of 2016 Page 13 of 29
35. Thus, OP-2 has prayed that on account of substantial value addition done by it
by way of its Lesser Penalty Application and oral statements, as well as
considering the prejudice caused to it on account of the flaws in the DG report,
maximum reduction of penalty permissible in law should be granted to it in
accordance with its priority status.
OP-3 and Shri Bipin Vijay Salunke (Proprietor of OP-3)
36. OP-3 and Shri Bipin Vijay Salunke have submitted that they have already
admitted to their role in the acts investigated by the D.G. and have no objection
to the conclusion arrived at in the investigation report of the DG. Accordingly,
their present reply relates only to two broad aspects i.e. entitlement to lesser
penalty and procedural and substantive errors in the investigation report of DG.
37. OP-3 has contended that even though summons issued to it by the DG pertained
only to Case no. 50 of 2015, Shri Bipin Vijay Salunke co-operated with the DG
and answered all questions relating to the present suo motu case without demur.
Moreover, bare reading of the investigation report shows that practically no de
novo investigation was required to be done into the particular facts and
circumstances of the tender covered by the instant case, possibly because the
disclosures in the Lesser Penalty Application of OP-3 were so comprehensive
that they sufficed to establish violations of provisions of the Act.
38. OP-3 has stated that in its Lesser Penalty Application as well as the oral
statements, that it gave a detailed description of how the alleged cartelisation
was carried out along with other OPs, including giving names of persons who
participated, nature of their relationship with Ecoman and its officers and dates
of when various concerted actions were done. It is averred that these precise facts
were not within the knowledge of the DG at that stage. In addition to disclosing
the modus operandi of the cartel, OP-3 also provided documentary evidence
Suo Motu Case No. 04 of 2016 Page 14 of 29
such as bank statements, emails, Affidavits, authorization letters and physical
digital keys/ pen drives obtained from Pune Municipal Corporation. In view of
foregoing, it is contended the disclosures made by OP-3 in the Lesser Penalty
Application and oral statements added significant value to the investigation.
39. Further, OP-3 has alleged that some procedural/ substantive errors were
committed in the investigation by the DG, which adversely affected its rights
and reputation at large. It has contended that the DG while preparing the
investigation report has breached the confidentiality under Regulation 6 of the
Lesser Penalty Regulations by appending entire statement of Shri Bipin Vijay
Salunke, in the public version of the investigation report and incorrectly stating
that no confidentiality was claimed. Regulation 6 of the Lesser Penalty
Regulation accords confidentiality to both the identity of the informant as well
as to the 'information' provided by it. OP-3 has contended that the term
'information' must be taken to cover both the written application as well as any
subsequent oral statement made to the DG as any other interpretation would
mean that a fact assured confidentiality in the written application would not be
entitled to confidentiality if stated during oral examination by the DG.
40. In view of above, OP-3 has prayed for grant of maximum reduction of penalty
permissible in law for OP-3 on account of providing a substantial value addition
by disclosing the new facts and documents in lesser penalty application and oral
statements, as well as on account of the flaws in the DG report.
OP-4 and Shri Vijay Raghunath Salunke (Director of OP-4)
41. OP-4 and Shri Vijay Raghunath Salunke in their combined written submission
submitted that they have no objection to the conclusion arrived at in the
investigation report of the DG and has already admitted to its role in the acts
investigated by the DG. Further, OP-4 has cooperated genuinely, fully and
continuously with the investigation and disclosed its entire role and that of its
Suo Motu Case No. 04 of 2016 Page 15 of 29
officers in the alleged bid rigging of tenders by way of written submissions and
oral statements and ceased the anti-competitive activities.
42. OP-4 has contented that on account of the disclosures made by it practically no
de novo investigation was required to be done by the DG into the instant Suo
Motu Case. It disclosed not only the objectives of the alleged cartelization but
also made comprehensive disclosure about the modus operandi of the cartel, the
manner in which OP-4 assisted the cartel and provided evidences such as bank
statements, Affidavits, authorization letters etc., which are vital pieces of
evidences establishing cartelization /bid rigging that could not have been
obtained without cooperation of OP-4.
43. OP-4 has submitted that only a manufacturer of the composting machines or an
authorized distributor of the said manufacturer was eligible to participate in PMC
tenders, and since OP-3 did not qualify this condition, Shri Vijay Raghunath
Salunke, Director of OP-4, a manufacturer of composting machines, on the
insistence of his son, Shri Bipin Salunke agreed to provide authorization to it as
authorized distributor of the Applicant to help it to qualify for PMC tenders.
OP-4 has contended that this was done with bona fide intent, as apart from
Ecoman no other eligible competitor or bidder participated in PMC tenders
between 2013-2015 despite extension of period of bidding. It is averred that
neither any consideration was offered nor received by OP-4 for this purpose. The
assistance was provided merely due to personal relationship with OP-2 and Shri
Bipin Vijay Salunke, who is the son of Shri Vijay Raghunath Salunke. Moreover,
no actual loss was caused to PMC due to inadvertent acts of OP-4, nor did such
acts foreclose the market to other competitors.
44. Additionally, OP-4 has pointed out some procedural and substantive errors in
the investigation report of the DG. It has stated that the DG by submitting only
one public version of the report, which appended the entire non-redacted
Suo Motu Case No. 04 of 2016 Page 16 of 29
statement of Shri Vijay Raghunath Salunke, acted in complete breach of
confidentiality of OP-4. Further, the DG report did not provide sufficient
guidance to Commission to decide lesser penalty application as it completely
ignores the fact that application for lesser penalty was filed by OP-4.
45. In view of the foregoing, OP-4 has prayed that on holistic evaluation of the value
addition due to facts and documents disclosed by OP-4 in the Lesser Penalty
Application and oral statements, as well as the prejudice cause to it on account
of the flaws in the DG Report, maximum reduction of penalty permissible in law
be granted to it.
Analysis:
46. Before proceeding to decide the case on merits, the Commission notes that OPs
have raised certain procedural issues such as breach of confidentiality by the DG/
Commission and incompleteness of the investigation report of the DG as it does
not reveal the fact that Lesser Penalty Applications had been filed by various
OPs in the matter or the value addition provided by such applications. In this
regard, it is observed that these issues have already been dealt with by the
Commission in Case no. 50 of 2015 (Nagrik Chetna Manch v Fortified Security
Solutions and Ors.). The observations of the Commission are reproduced here
for completeness of this order.
Procedural Issues:
A. Breach of confidentiality by the DG/ Commission
47. It is noted that one objection that almost all OPs have taken is the issue of breach
of confidentiality by the DG/ Commission. The OPs have claimed that DG, by
disclosing the contents of their statements made before it in the investigation
report as non-confidential information, has in effect disclosed the contents of
their respective Lesser Penalty Application in breach of confidentiality accorded
Suo Motu Case No. 04 of 2016 Page 17 of 29
in terms of the Lesser Penalty Regulations. Further, the Commission by
forwarding such report to the OPs has aided the breach of confidentiality.
48. The Commission, on careful consideration, finds this contention of the OPs to
be misconceived. It is noted that application by an Applicant under Lesser
Penalty Regulations and statements of the OPs before the DG, are separate set
of evidence. The application under Section 46 of Act is filed before the
Commission in terms of the Lesser Penalty Regulations. The confidentiality on
such an application is governed in terms of the said Regulations. The confidential
treatment granted under Lesser Penalty Regulations does not extend to evidence
obtained or collected by the DG, even if such an evidence is obtained from a
Lesser Penalty Applicant. Therefore, statements of the OPs recorded by DG are
an independent evidence. These may or may not contain the information
submitted in the Lesser Penalty Regulations. The confidentiality on such an
evidence can only be in terms of Regulation 35 of the General Regulations, for
which the tests laid down in Regulation 35(3) and 35(9) of the General
Regulations have to be satisfied. There is nothing on record to show that the OPs
sought confidential treatment on their statements or the same was granted by the
DG under those Regulations. It goes without saying that if confidential treatment
is neither sought nor granted on any evidence, same shall be treated as non-
confidential for the purposes of the case. In such a scenario, including this
material evidence in the investigation report is essential to enable the parties to
the case to exercise their right of defence.
49. At the same time, it is pertinent to note that even in the case of information
submitted under the Lesser Penalty Regulations, where confidentiality granted
to information is over and above that granted under Regulation 35 of the General
Regulations, confidentiality will remain subject to the provisions of Section 57
of the Act under which the Commission can disclose such information for the
purposes of the Act.
Suo Motu Case No. 04 of 2016 Page 18 of 29
50. Be that as it may, in the instant case, it is noted that OPs are claiming reputational
harm not because of disclosure of confidential information in the investigation
report of the DG but because of disclosure of such information to the public at
large. In this regard, the Commission observes that it is well recognized fact that
the investigation report is not a public document and is not to be shared with
public. This aspect is enshrined in Regulation 47 of the Competition
Commission of India (General) Regulations, 2009 (hereinafter, 'General
Regulations'), which clearly provides that the proceedings before the
Commission are not open to public, except where the Commission so directs. In
the instant case, there being no direction to make proceedings open to public,
there was no question of sharing of the investigation report of the DG with
anyone other than the OPs.
51. It seems that the contention of the OPs regarding sharing of investigation report
in the instant case emanates from an incident in Case no. 50 of 2015 wherein the
Informant had shared the investigation report with the media. The OPs have
merely made similar contention of breach of confidentiality in this case also
without placing on record any evidence to show that the contents of investigation
report in this case were also disclosed in public domain. The instant case being
taken up suo motu, the investigation report was not shared with anyone other
than the OPs. Since the OPs were themselves involved in the conduct, they were
well aware of each other's conduct and disclosure of their statements to each
other cannot be considered to cause any reputational harm.
52. In view of the foregoing, contention of the OPs that reputational harm has been
caused due to action/ omission of the DG/ Commission appears to be misplaced.
Such harm, if any, has been caused due to OPs own acts of collusion in
contravention of the provisions of the Act. The allegation against the DG/
Commission is nothing more than a ruse to get reduction or discharge from
Suo Motu Case No. 04 of 2016 Page 19 of 29
imposition of penalty under the Act.
B. The Investigation report of the DG does not reveal the fact that Lesser Penalty
Applications had been filed by various OPs in the matter or the value addition
provided by such Applications:
53. Some OPs have contended that the investigation report did not adequately deal
with and distinguish between the evidences/ information that had been gathered
by the DG on its own vis-à-vis those that had been furnished by the Lesser
Penalty Applicants. Further, it is averred that by excluding the fact that OPs had
filed Lesser Penalty Applications and the value addition that was provided by
their information, the investigation report has remained incomplete.
54. In this regard, the Commission observes that what OPs have referred to as
incompleteness, in fact protects the identity of the Lesser Penalty Applicants. If
the investigation report was to identify the evidences furnished by the Lesser
Penalty Applicant(s), it would not only disclose the identity of such Applicant(s)
but also the contents of Lesser Penalty Application, on which OPs have
themselves vehemently claimed confidentiality. Further, the decision on
significant value addition by the Lesser Penalty Applicant and consequent
reduction in penalty to the Applicant is something which only the Commission
can decide and not the DG. Such a decision would be made looking into the
contents of the Lesser Penalty Application, documents/ additional evidence
obtained during investigation by the DG, investigation report of the DG and
submissions of the OPs thereon. The observation in this regard would form part
of the order of the Commission and not the investigation report of the DG.
Hence, the Commission finds no inconsistency or incompleteness in the
investigation report of the DG.
Suo Motu Case No. 04 of 2016 Page 20 of 29
Establishment of Violation:
55. The Commission has perused the facts of the case, the investigation report of
DG, submissions made in Lesser Penalty Applications and submissions of the
OPs thereon. On consideration of the same, it is observed that the evidence
adduced by the DG during investigation and the admissions of OPs under Section
46 of the Act categorically establishes cartelisation and bid rigging in Tender no.
59 of 2014.
56. The investigation into the matter reveals that lead role in the cartel was played
by Shri Bipin Vijay Salunke, a director in OP-2 and also the sole proprietor of
OP-3. The motive of cartelisation and bid rigging was to ensure that OP-2
emerged as L1 and won the tenders issued by PMC. To achieve this, Shri Bipin
Vijay Salunke ensured that there were minimum three eligible bidders for the
tender as the tender process guidelines laid down a minimum of three technically
qualified bidders. For this, Shri Bipin Vijay Salunke approached the Director of
OP-1 i.e. Lahs Green India Pvt. Ltd. to bid as proxy bidder and file documents
in Tender no. 59 of 2014. He also propped up OP-3 as proxy bidder in the tender.
57. To enable the participation of OP-3, which did not have any experience or
background in solid waste management, Shri Bipin Vijay Salunke arranged for
the authorisation certificate for OP-3 from OP-4 in which his father Shri Vijay
Raghunath Salunke was a Director, thus projecting it as an authorized distributor
of composting machine, which it was not. Further, Shri Bipin Vijay Salunke
prepared the DDs for EMD for the proxy bidders. Also, for participation in
Tender no. 59 of 2014, he obtained the relevant documents from OP-1 and
uploaded the same on its behalf for the online tender. All of this was orchestrated
by Shri Bipin Vijay Salunke so that OP-2 emerged as L1 bidder.
58. There is, thus, no doubt that there was meeting of mind and collusion amongst
Suo Motu Case No. 04 of 2016 Page 21 of 29
OP-1, OP-2 and OP-3 to rig Tender no. 59 of 2014 floated by PMC.
59. As regards the role of OP-4, it is observed that it authorised OP-3 as distributor
of its composting machines to participate in the tender. Not only that, the bank
account of Shri Vijay Raghunath Salunke and Smt. Sulabha Raghunath Salunke
were debited for preparing the DDs for OP-1 and OP-2; and OP 3. These
evidences show that OP-4 not only aided OP-3 to bid for tender but also played
a pivotal role in the operation of the cartel. Strangely, despite having the requisite
experience, OP-4 did not participate in the tender itself, which further assisted
OP-2 to win the tenders. Thus, the Commission finds that contravention of
provisions of Section 3(3)(d) read with Section 3(1) of the Act is made out in the
instant case not only against OP-1, OP-2 and OP-3 but also against OP-4.
60. Additionally, the Commission notes that some of the OPs have averred that no
appreciable adverse effect on competition in India has been caused by way of
any meeting of minds in this case, as the entry was not restricted in any manner
due to agreement/ cartel and no actual loss was caused to PMC. Moreover, no
consideration was derived from OP-2 by other bidders for submitting their bids,
therefore, the latter did not even benefit from bid rigging.
61. In this regard, the Commission observes that under the provisions of Section
3(3)(d) of the Act, bid rigging shall be presumed to have adverse effect on
competition independent of duration or purpose and, also, whether benefit was
actually derived or not from the cartel.
62. In terms of the provisions contained in Section 3(1) of the Act, no enterprise or
association of enterprises or person or association of persons can enter into any
agreement in respect of production, supply, distribution, storage, acquisition or
control of goods or provision of services, which causes or is likely to cause an
appreciable adverse effect on competition within India. Section 3(2) of the Act
Suo Motu Case No. 04 of 2016 Page 22 of 29
declares that any agreement entered into in contravention of the provisions
contained in sub-section (1) shall be void. Further, by virtue of the presumption
contained in subsection (3), any agreement entered into between enterprises or
associations of enterprises or persons or associations of persons or between any
person and enterprise or practice carried on, or decision taken by, any association
of enterprises or association of persons, including cartels, engaged in identical
or similar trade of goods or provision of services, which - (a) directly or
indirectly determines purchase or sale prices; (b) limits or controls production,
supply, markets, technical development, investment or provision of services; (c)
shares the market or source of production or provision of services by way of
allocation of geographical area of market, or type of goods or services, or number
of customers in the market or any other similar way; (d) directly or indirectly
results in bid rigging or collusive bidding, shall be presumed to have an
appreciable adverse effect on competition.
63. Thus, in case of agreements listed under Section 3(3) of the Act, once it is
established that such an agreement exists, it will be presumed that the agreement
has an appreciable adverse effect on competition and the onus to rebut the
presumption would lie upon the OPs.
64. In the present case, the OPs have neither been able to rebut the said presumption
nor been able to show how the impugned conduct resulted into accrual of
benefits to consumers or made improvements in production or distribution of
goods in question.
65. Further, with respect to the averment of the OPs that since bid rigging has not
restricted entry there is no appreciable adverse effect on competition and hence
no contravention of the provisions of Section 3(3) of the Act, the Commission
observes that mere possibility that other bidders could have bid for the tender
cannot absolve the colluding OPs from their conduct of bid rigging. Explanation
Suo Motu Case No. 04 of 2016 Page 23 of 29
to Section 3(3) of the Act makes it clear that bid rigging even includes an
agreement that has the effect of reducing competition for bids or adversely
affecting or manipulating the process of bidding. Therefore, even if a subset of
bidders collude amongst themselves to rig or manipulate bidding process, it
would be a violation of Section 3(3)(d) of the Act.
66. So far as the role and liability of officials of OP-1, OP-2, OP-3 and OP-4, the
Commission notes that the DG has identified Shri Saiprasad S. Prabhukhanolkar
(OP-1), Shri Bipin Vijay Salunke (OP-2 and OP-3), Shri Parimal Salunke
(OP-2) and Shri Vijay Raghunath Salunke (OP-4) as the key persons involved in
the cartel under Section 48(2) of the Act.
67. The Commission is in agreement with the findings of the DG on the role and
liability of the person(s)/ officer(s) of the OPs under Section 48(2) of the Act.
However, the Commission notes that under Section 48 separate liability arises
against the officer(s)/ person(s) of the contravening company including
partnership firms but not proprietorship firms. In the Explanation to Section 48
of the Act, the word 'Company' is defined to include body corporate or firms or
association of firms but not proprietorship firms. Thus, the Commission is of the
view that provisions of this section would not apply to proprietorship firms.
Accordingly, since OP-3 is a proprietorship firm in the present case, the
Commission decides not to hold its person(s)/ officer(s) separately liable under
Section 48 of the Act. However, person(s)/ officer(s) who are the director/
executive director/ partners of OP-1, OP-2 and OP-4, would be liable. The role
and liability of these individuals is discussed below:
a. Role of key persons in OP-1:
For OP-1, Shri Saiprasad S. Prabhukhanolkar was the key person involved
in the cartel. In his statement of oath, he stated that he was the managing
director of OP-1 and handled overall management of the company. He
Suo Motu Case No. 04 of 2016 Page 24 of 29
admitted that the cartelisation in Tender no. 59 of 2014 was done at the
behest of Shri Bipin Vijay Salunke, who requested him to provide the
relevant documents to bid as proxy bidder. Further, the DDs for EMD were
prepared by OP-2 directly without the knowledge of OP-1. No money either
in cash or cheque nor any other consideration was given for the said purpose.
Shri Saiprasad S. Prabhukhanolkar accepted his role in the cartel, which was
corroborated by Shri Bipin Vijay Salunke who accepted that Shri Saiprasad
S. Prabhukhanolkar was contacted by him to act as proxy/ dummy bidder.
Thus, the DG found that Shri Saiprasad S. Prabhukhanolkar was the key
person of OP-4 who coordinated with Shri Bipin Vijay Salunke in the cartel.
b. Role of key persons in OP-2:
Shri Bipin Vijay Salunke, Director of OP-2
i. OP-2, a private limited company registered under the Companies Act,
1956, has two directors, namely, Shri Bipin Vijay Salunke and Smt.
Sulabha Vijay Salunke. For OP-2, Shri Bipin Vijay Salunke managed
the overall operations and business activity while the role of Smt.
Sulabha Vijay Salunke was limited to being the signing authority for
compliance of any legal documents. In the cartel, the role of Smt.
Sulabha Vijay Salunke was limited to providing assistance to OP-3 as
the DD for EMD for OP-3 was prepared from the bank account of
Smt. Sulabha Vijay Salunke.
ii. Shri Bipin Vijay Salunke admitted to having formed a cartel to rig the
bid. In his statement on oath, he admitted that he personally knew all
the competitors bidding in Tender no. 59 of 2014. He stated that Shri
Saiprasad S. Prabhukhanolkar (Managing Director of OP-4) was his
good friend and gave the documents for submitting cover bid on
behalf of OP-1, based on their friendship and relationship.
Suo Motu Case No. 04 of 2016 Page 25 of 29
iii. Further, he admitted that he sent Shri Parimal Salunke to the PMC
for purchasing/ procuring the digital key for OP-1 and OP-3 by
submitting all the relevant documents and registered his mobile
number for telephonic verification by the PMC.
iv. Shri Bipin Vijay Salunke also admitted that DDs for EMD for various
bidders in various tenders were prepared by Shri Parimal Salunke on
his instructions from the bank accounts of Shri Vijay Raghunath
Salunke and Smt. Sulabha Salunke (parents of Shri Bipin Vijay
Salunke). He also admitted that technical and price bids for various
bidders in the above said tenders were scanned and uploaded by Shri
Parimal Salunke from the office of OP-2 and hence, the same IP
addresses.
v. Further, the statement on oath of Saiprasad S. Prabhukhanolkar also
corroborated that Shri Bipin Vijay Salunke requested that OP-1 act as
proxy/ dummy bidder in Tender no. 59 of 2014.
vi. Thus, Shri Bipin Vijay Salunke is the main person behind the cartel
activity who was responsible for the bid rigging, which is apparent
from the evidences gathered and corroborative statements of the
officials of other OPs.
Shri Parimal Salunke, Executive Director of OP-2
vii. The evidences gathered during the course of investigation and the
statement on oath of Shri Bipin Vijay Salunke show that apart from
Shri Bipin Vijay Salunke, Shri Parimal Salunke who was Executive
Director of OP-2 and cousin of Shri Bipin Vijay Salunke also played
an important role in the cartel.
Suo Motu Case No. 04 of 2016 Page 26 of 29
viii. Shri Parimal Salunke procured the digital keys for OP-1 and OP-3 by
submitting all the relevant documents in the Pune Municipal
Corporation office. Also, DDs for EMD for the bidders were
prepared by Shri Parimal Salunke on the instructions of Shri Bipin
Vijay Salunke. Furthermore, relevant documents and the technical
and price bids for various bidders in the impugned tenders were
scanned and uploaded by Shri Parimal Salunke from the office of OP-
2, resulting in uploading of documents from the same IP address.
ix. Shri Parimal Salunke when confronted with the statement of Shri
Bipin Vijay Salunke describing his role in the cartel, accepted his role
in the bid-rigging/cartel in the manner as described above. Thus, Shri
Parimal Salunke aided and assisted Shri Bipin Vijay Salunke to carry
out activity of cartelisation and coordination with other bidders.
c. Role of key persons in OP-3:
For OP-3, Shri Bipin Vijay Salunke, proprietor of OP-3, was the key person
involved in the cartel. In his statement on oath, he stated that OP-3
submitted bid for Tender no. 59 of 2014 even though it did not have any
expertise in the area of solid waste management. He admitted that he knew
the competitors for these tenders as he himself roped them in and requested
them to place proxy bids. He admitted that he was involved in collusive
bidding in Tender no. 59 of 2014, which was also corroborated by various
evidences gathered during the investigation.
d. Role of key persons in OP-4;
For OP-4, Shri Vijay Raghunath Salunke, Director of OP-4 and father of
Shri Bipin Vijay Salunke, was the key person involved in the cartel. In his
statement on oath, he accepted that authorisation letter was given to OP-3
Suo Motu Case No. 04 of 2016 Page 27 of 29
by OP-4 as its distributor for participating in the tender, despite not having
any background of solid waste management. He submitted that the
authorization letters/ certificates given to OP-3 were signed by a former
director - Smt. Smita Avinash Shirolkar. He also accepted that his personal
bank account was used for preparing the DDs for EMD for Tender no. 59
of 214 for OP-1 and OP-2. He stated that Shri Bipin Vijay Salunke had
requested him to prepare DDs for EMD for OP-1 and OP-2 which were
arranged from his personal bank account with Bank of Maharashtra. Thus,
this clearly shows that Shri Vijay Raghunath Salunke was aware of the
cartel activity being carried out by his son, Shri Bipin Vijay Salunke and
establishes his complicity in the cartel.
ORDER
68. In view of the finding of contravention against OP-1, OP-2, OP-3 and OP-4, the Commission directs them to cease and desist from indulging in such anti- competitive conduct in future.
69. As regards the penalty to be imposed under Section 27 of the Act, the Commission finds that OP-1, OP-2, OP-3 and OP-4 entered into an arrangement to rig Tender no. 59 of 2014 floated by Pune Municipal Corporation, as brought out hereinabove. Further, all the four OPs accepted that they had an understanding/ arrangement with each other to rig/ manipulate the above mentioned tender. Consequently, all the OPs are responsible for infringement of the provisions of the Act and, hence, are liable for penalty. However, the Commission observes that Tender no. 59 of 2014, which is subject matter of this case pertains to the same period to which the tenders in Case no 50 of 5015 belonged. Considering that, penalty has already been levied on the OPs in Case no. 50 of 2015, Commission decides not to again impose penalty on the OPs for Suo Motu Case No. 04 of 2016 Page 28 of 29 the same period. For the same reason, Commission also decides not to impose penalty on the individuals of the OPs as well.
70. The Secretary is directed to inform the parties accordingly.
Sd/-
(Devender Kumar Sikri) Chairperson Sd/-
(Sudhir Mital) Member Sd/-
(Augustine Peter) Member Sd/-
(U. C. Nahta) Member New Delhi Dated: 31.05.2018 Suo Motu Case No. 04 of 2016 Page 29 of 29