India: The Excel Crop Case: Turnover vs. Relevant Turnover

Last Updated: 9 August 2017

Article by James Thomas Cox*


Industrial manufacturing has grown with the rapid expansion of India's production market over the past twenty years. Some manufacturing companies, especially in the chemical industry, derived a significant portion of their revenue from governmental bids. These bids are often called for from one of several government agencies, and are received from only a handful of companies. With so few participants, collusive behavior has occurred on occasion with negative market effects. Recently, the Supreme Court ("SC") in "Excel Crop. Care Limited vs. Competition Commission of India and Ors."1confirmed a Competition Commission of India ("CCI") ruling that three Aluminum Phosphide Tablets ("APT") producers had participated in "bid rigging"2 in violation of Section 33 of the Competition Act, 2002 ("Act").

This newsletter aims to analyze the rulings of the CCI, Competition Appellate Tribunal ("COMPAT"), and SC, and what further issues companies must consider in response to this case.

1. Facts and CCI Ruling

The Food Corporation of India ("FCI") complained to CCI on February 4, 2011 that Excel Crop Care Limited ("Excel"), United Phosphorous Limited ("United"), and Sandhya Organics Chemicals ("Sandhya")4 had formed a cartel and agreed to raise bid prices between 2007 and 2009 for APT. FCI also claimed the companies had submitted identical rates in the tenders for the purchase of APT since 2002. This potentially illegal behavior was ominous for FCI because its demand for APT had doubled in the previous 3 years and was expected to continue rising. From the complaint, the CCI instructed the Director General ("DG") to investigate the matter.5

The DG found that majority buyers of APT were government entities and only four companies manufactured APT in India. Although government tenders for APT were issued globally, no bids typically came from outside India. The DG also found that from 2002 to 2009 all the companies quoted identical rates at each tender invited by FCI, except in 2007. Further, at least two of the three suppliers had offered identical quotes at least 13 times to several government agencies between 2007 and 2011, including twice after FCI's complaint was filed. Finally, the companies had uniformly boycotted a tender offer made by FCI in 2011. The DG concluded that these facts overcame the possibility of coincidence and concluded an agreement to limit competition must have been formed.

In response to the DG's findings, the companies gave largely similar arguments. Firstly, they argued any agreement for a May 2009 tender could not be considered since Section 3 was notified after the tender closed. They also claimed the 2011 boycott was out of the purview of the complaint and could not be considered. Secondly, they claimed a change in price was a result of a rise in cost of a raw ingredient of APT imported from China. Thirdly, there was no further evidence of an agreement occurring, no phone call, or document, or otherwise. The identical prices could be attributed to the companies basing their quotes on past tender offers. They claimed no agreements were made between them regarding their bid prices.

Considering the arguments and findings, the CCI ruled the companies had violated the provisions of Section 3 by their actions between 2009 and 2011. In regard to the applicability of the law and ability of DG to investigate the boycott, the CCI ruled the DG was responsible for investigating if any illegal conduct had occurred at any time. He should not make a fact specific or narrow investigation and could investigate the 2011 boycott and signs of agreement in 2009 after Section 3 was notified, even if those acts arose from an agreement made previously. Next, the CCI held the "coincidence" of identical price quoting had a zero percent chance of happening without some type of agreement. Despite no "physical" evidence, the circumstantial evidence was enough. The companies had varying cost structures and geographical locations that would, in normal circumstances, assume different bid prices.

The CCI awarded penalties of approximately USD 9.8 million for Excel, USD 241,538 for Sandhya, and USD 39 million for United.6 The penalties were calculated as 9% of the companies' average turnover from the previous 3 years as allowed under Section 27(b).7

2. COMPAT's Findings

Unhappy with both the ruling and the penalties, all three companies preferred an appeal before the COMPAT and raised the same arguments with the additional complaint that the penalties were too high. They argued that only relevant turnover should have been considered as a basis for penalty. Relevant turnover is not defined or mentioned in the Act, but is generally turnover related to the product in question.8 The companies believed they had been penalized too high for the harm they might have caused and should have been penalized only on turnover related to the production of APT.

The COMPAT rejected all appeals except the amount of penalty imposed by the CCI. Considering the arguments, COMPAT first chided the CCI for not giving any justification for the 9% penalty. Then, it acknowledged the penalty at 9% of total turnover was not unreasonable since the APT was used for food-grains in the public distribution system and the companies' behavior amounted to taking from the lowest members of society. Despite this, COMPAT ruled that the penalty must be calculated on "relevant turnover." This penalty better aligned with the doctrine of proportionality and pronounced the need for the CCI to explain its rationale when handing out harsh penalties. Penalties were reduced to approximately USD 450,000 for Excel and USD 1 million for United. For Sandhya, COMPAT separately considered a reduction because its only product was APT and it was much smaller than the other companies. As a result, both these factors were sufficient to reduce its penalty by 1/10th for a total of USD 24, 154.

3. The Supreme Court

Again faced with fines, the companies appealed COMPAT's decision to the SC and the CCI also appealed the COMPAT's lowering of penalties to the apex court. The SC combined the appeals into one case and evaluated four, main issues: (i) whether the CCI appropriately considered the May 2009 tender, (ii) whether the CCI could investigate behavior occurring after the complaint was made, specifically the 2011 boycott, (iii) whether the purported violations under Section 3 were justified, and (iv) whether a penalty levied under Section 27 had to be on total turnover, or if it could be assessed only from a company's "relevant turnover."

3.1 Pre-Enactment Actions: The appellants again argued that an alleged violation from the May 2009 tender amounted to a retrospective enforcement of the law.9 In response, the SC ruled that the companies were penalized for acts taken not only in March 2009 but also for actions taken in later 2009, 2010, and 2011 when the Act was in force. Further, the agreement for anti-competitive behavior in relation to the March 2009 tender did not stop in effect after the initial offer. There were rounds of negotiation in June 2009 where actions were reflective of previous agreements, taken before the law went into effect, but acted upon after and, therefore, still fell under the scope of the law and worthy of investigation. Thus, the SC upheld the CCI and COMPAT rulings regarding the March 2009 tender.

3.2 Behavior outside of complaint made: On this issue, the SC entirely agreed with the COMPAT ruling affirming the CCI order that the DG's ability to investigate in Section 26 was large enough to include evaluating acts taken after an original complaint is made. Further, the general complaint made by FCI was not in respect of one particular tender or action, but the overall anti-competitive behavior through a cartel. The SC asserted the DG is empowered to look at all necessary facts in the investigation, which can only begin after the CCI forms a prime facie opinion that a violation has occurred. At that point, they do not have sufficient information to determine when or where the violation occurred. Therefore, the DG has the power to look at all circumstances for where a violation may have occurred before making recommendation to the CCI.

3.3 Violations Justified: The companies offered a new explanation for their identical pricing before the SC. They claimed that because there are only a couple buyers and sellers, identical pricing was a natural occurrence. They also claimed the 2011 tender was boycotted because its payment for placing a bid was too high. They also pointed out that no companies had submitted a bid then. The court rejected these arguments. First, identical pricing was incredibly strange given the differences in the companies' production cost and geographic location. Regardless of location all bids were the same. Second, the sheer volume of identically priced bids was also strange. Third, the probability that some type of anti-competitive agreement could occur was enhanced with only four suppliers in India. Fourth, the companies offered varying prices for different bids, but identical prices at each bid. This was enough circumstantial evidence to prove an agreement existed without a proper rebuttal from the companies. The SC concluded that the CCI's ruling was entirely justified.

3.4 Appropriate Penalty: The final issue arose from the CCI's unhappiness with the COMPAT's reduction in penalties by only considering relevant turnover. The CCI argued Section 27 only uses the word "turnover" and, therefore, considering only relevant turnover would amount to adding "relevant" into the statute unjustifiably. They also believed that the penalties are primarily used as a deterrent for future behavior, and, therefore, were justified if slightly out of proportion. However, the SC confirmed the COMPAT's view that only relevant turnover should be considered on the basis that these violations typically arise from only particular products or circumstances and imposing fines that draw from resources unrelated to those particular products or circumstances would lead to unfair and punitive outcomes. The SC also emphasized the importance of proportionality in punishment, and stated that the deterrent as well as punishing intent of the penalty would be adequately served when considering only relevant turnover.


The SC's judgment reinforcing a proportional approach to calculating penalties under the Act will be welcomed by companies. It potentially removes more punitive calculations going forward, and overall lowers the risk companies take when they engage in behavior that could be investigated under sections 3 and 4. This approach aligns India's practices with the approach taken in other developed competition law regimes, such as Europe or America. However, given the SC's support for a robust investigatory process, companies should be cautious in all bidding processes, more so, when a complaint has been filed against them with the CCI. Rather, they should pay close attention to regulations and SC rulings, and amendments to the Act to be better prepared as to what kind of behavior will be tolerated. With this ruling, the SC seems to have cut CCI's penal powers and it may be possible other companies who were fined on overall turnover, may set the appeal process in motion.


* This E-Newsline is prepared by James Thomas Cox, a first year J.D. student at The University of Georgia School of Law, Athens (under the guidance of Priti Suri, Founder - Partner) who is pursuing his internship at PSA

1. 2017(6) SCALE241

2. Section 3 defines "bid rigging" as any agreement, between enterprises or persons engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding.

3. Section 3 prohibits any type of agreement between enterprises that has an appreciable anti-competitive affect in India. Bid rigging or collusive bidding qualify as anti-competitive.

4. There was a fourth company included in the complaint, Agrosynth Chemicals Limited, which was exonerated by the CCI and not discussed by the COMPAT or SC.

5. Section 26 equips the CCI to order the DG to investigate a matter once it has a prima facie belief a violation of the Act has occurred.

6. USD 1 = about INR 65.

7. Section 27 equips the CCI to impose penalties up to ten percent of the average of the turnover for the three preceding years for violations of Section 3 or 4 which prohibits abuse of a dominant market position.

8. 2013 Comp LR 799, page no. 822

9. They argued this would be a retrospective enforcement of the Act, which was against the Act's intention of being a prospective legislation.

This E-Newsline is prepared by James Thomas Cox, a first year J.D. student at The University of Georgia School of Law, Athens (under the guidance of Priti Suri, Founder - Partner) who is pursuing his internship at PSA

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
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