Kochhar & Co. Successfully Represents PSU OMCs Before the CCI Against Allegations of Anti-Competitiveness and Abuse of Dominant Position; CCI Imposes Penalty of USD 5.2 million on the Leading Sugar Manufacturers in India and their Industry Associations.

Deals & Matters
10 September 2018

Kochhar & Co. successfully represented the three leading public sector units (PSUs) namely Bharat Petroleum Corporation Limited – BPCL; Hindustan Petroleum Corporation Limited – HPCL; and Indian Oil Corporation Limited – IOCL; together referred to as the Oil Marketing Companies (OMCs) before the Competition Commission of India (CCI) against allegations of anti-competitiveness and abuse of dominant position.

In a common order dated 18 September 2018 relating to six complaints wherein 26 parties were arrayed as opposite parties, the CCI imposed a penalty of USD 5.2 million (approx. INR 38.05 Crore) on 20 parties (18 sugar mills and 2 trade associations) while rejecting the allegations against the OMCs.

The CCI, while exonerating the three OMCs of charges of violating the provisions of the Competition Act, 2002 by floating a joint tender, has held that “since the terms of the tender are same for all the OMCs, floating a joint tender is not only a more efficient option, but is also more cost-effective, as it eliminates cost, time and effort in floating multiple tenders with the same terms and conditions”, while going on to say that “floating of joint tender by OMCs for procurement of ethanol per se cannot be construed as anti-competitive particularly when such process has evident efficiency benefits”. Below is the link to the CCI order .

This is a landmark decision wherein the CCI has undertaken an in-depth study of the benefits of joint purchasing and distinguished the same from cartelization because of the pro-competitive effects accorded by the former as against the adverse impact that the latter has.