India: Getting Rid Of Bid Rigging In Public Procurement

Last Updated: 17 November 2015

Article by MM Sharma, Head Competition Law & Policy Practice, Vaish Associates, Advocates, New Delhi, India

The jurisprudence of CCI with respect of cartel and bid rigging is still evolving.

Public procurement in India constitutes about 30% of GDP, with total annual expenditure of around Rs 15-20 lakh crore, and that for the Union government alone in the range of Rs 2.5-3 lakh crore. This government activity is most vulnerable to corruption, not only between the suppliers and government staff but also within the suppliers themselves. The latter emerges in the form of cartels, i.e. bid rigging and collusive bidding—a form of cartelisation.

Whether an industry can become cartelised or not depends upon—apart from common factors such as market concentration or limited number of producers, high and inelastic demand, absence of substitute products—how great the incentives are for the firms in the industry to form a cartel and how sustainable the cartel is likely to be. The incentives to create a cartel depend on the difference between the profitability of the firms in the presence of a cartel and in the absence of a cartel. A sustainability of a cartel, in turn, depends on two factors. One, whether the incentives of the firms to cheat on the cartel agreement outweigh the likelihood of cheating being detected and punished by other cartel members. Two, the reputation of a strong enforcement authority ensuring fast detection of cartel and inevitability of meeting with very harsh punishment prescribed in the law and whether there are precedents of success in such investigations with the help of expert antitrust attorneys/legal advice.

At the same time, supply-side responses by non-cartel members can undermine the cartel, especially where the entry in a market is easy or it is easy for non-cartel members of the industry to expand their output in response to cartel members raising their prices, making the cartel no longer sustainable. This way, supply-side responses by non-cartel members can neutralise a cartel which can also be described as "the response of the market forces."

In the last six years of enforcement, the Competition Commission of India (CCI) has built a reputation of a proactive regulator by taking up suo motu investigations, based on references from government departments. It has prosecuted cartel allegations in 33 cases of anticompetitive agreements, including 12 cases of bid rigging cartels from PSUs (two cases transferred from erstwhile MRTPC). The cartel cases related to a wide spectrum of the economy, covering diverse sectors such as pharma, energy (LPG domestic cylinders), media (film/cable distribution and exhibition), travel and tourism (travel agents), infrastructure (cement), food (food storage in FCI godowns), health, transport (shipping, civil aviation, trucks) and recently insurance. This list also includes an increasing number of cases of bid rigging in the defence sector, related to procurement by military units, such as bid rigging in DGS&D rates contracts for supply of jungle boots to armed forces and recently bid rigging in supply of CN containers (containers with disc required for 81mm bombs to three ordnance factories). In a welcome trend, CCI penalised four PSU insurance companies with R671 crore for bid rigging tenders for providing insurance cover for social welfare schemes of Kerala. Appeals have been filed or will be filed by parties in almost all these cases. In a fairly transparent legal structure, such challenges are signs of developing jurisprudence.

A perusal of CCI orders in bid rigging cases over the last six years shows a hardening stance, and the quotation of identical rates by bidders, despite different locations and different cost of production, has been considered sufficient for conviction, whether there exists any other corroboration or "plus factor" in the form of pre-bid meetings, active industry association, etc, or not. Recently, a contrast was noticeable in two orders of CCI, both involving allegations of bid rigging in supplies of products to the production units of Indian Railways by similar parties, which seems to indicate a rethinking by the regulator on its earlier stand.

For instance, the penalty imposed by CCI in February 2014 on three manufacturers of "feed-valves" (spare parts for diesel locomotives) quoting identical prices—matching up to two decimals—in response to one regular tender issued by Indian Railways was based on the following conclusion: That the quotation of identical prices by manufacturers despite having been located at different geographical locations and having different cost of production is sufficient to establish cartelisation, without any direct evidence of collusion. As said, this case showed a hardened stance towards bid rigging cartels by CCI.

In complete turnaround, in another case decided by CCI recently in September 2015, two (of the three in the above case) manufacturers of disk brake system—supplied to Rail Coach Factory, Kapurthala—who quoted identical prices (matching up to two decimals) in response to three emergency purchase tenders issued by Indian Railways were exonerated from the allegation of bid rigging in spite of the director general finding evidence of bid rigging by the two parties after a detailed investigation. Noticeably, the two manufacturers are the only two approved suppliers of disc brakes and a genuine competition between them would have brought prices down for the product. Clearly, CCI ignored its own yardstick of the evidence of similarity of prices despite different geographical locations and the strong degree of probability which such exact similarity of prices in three successive tenders throws open. As regards the other factor considered by CCI in previous cases, whether their costs of production were similar or not, CCI has accepted the defiance of the parties against non-disclosure of cost breakup in the post-tender scrutiny to the Railways. Due to a legal lacunae, no appeal can be filed against this order by the Railways.

Importantly, while closing the allegations of cartelisation, CCI noted that the procurement policies of the Railways have also contributed to the lack of competition between the suppliers in the current case (being only two suppliers) and has advised the ministry of railways to modify the said policies to incentivise suppliers. It has advised for a reassessment of the role of Research Design and Standards Organisation (RDSO) so as to sub serve the objectives of competition.

Similarly, in another case decided in July 2015, CCI exonerated all the five firms from allegations of bid rigging. The reference was filed by the North Western Railway against five firms approved by RDSO for supplying "fire retardant vinyl upholstery fabric leather confirming to RDSO specifications" to the Railways. The allegation was that the firms had rigged the bids as a strategy in terms of a cartel/understanding among themselves so that only the largest of them secured all the orders most of the time being the lowest bidder. It was alleged that the rates quoted by the said firm were higher than those quoted by it in other railway zones; these were not competitive in nature and were exorbitant.

However, the director general, after conducting a detailed investigation, noted that the prices quoted by the bidders were actually lower than the indicated price of upholstery determined by the Railway Board, thus dismissing the allegation of excessive prices being quoted by the bidders. Agreeing with the findings CCI found that the largest firm against whom the primary allegations were made was justified in quoting higher prices on account of devaluation of the rupee and hike in petroleum prices, which led to increase in manufacturing cost of upholstery. CCI took into account that the parties had established they were independent entities and even the IP addresses of computers from which bids were submitted were found to be distinct. No evidence of any collusion/cartel was found, which would have resulted in the violation of the Act. Thus, an objective justification provided by the main accused party was accepted by CCI, showing a change in trend.

The jurisprudence of CCI with respect of cartel and bid rigging is evolving. The above two decisions show a possible maturing of thinking on mere identical prices being considered sufficient to prove the allegation. It is hoped CCI will be consistent in its approach.

Originally published The Financial Express on September 21, 2015.

Specific Questions relating to this article should be addressed directly to the author.

© 2015, Vaish Associates, Advocates,
All rights reserved with Vaish Associates, Advocates, 10, Hailey Road, Flat No. 5-7, New Delhi-110001, India.

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions