CCI initiated suo motu inquiry and took cognizance of numerous alleged instances of bid rigging by contractors engaged in road construction in response to tenders floated by the State of Uttar Pradesh.^[1] CCI commenced its inquiry based on a report of the Comptroller and Auditor General of India (‘CAG’), which made observations on possible cartelisation between road contractors in various tenders floated or bids submitted for road construction undertaken in Gorakhpur and Basti districts in Uttar Pradesh between 2011 – 2016. The CAG in the report, analysed data of bids received during 2011 – 2016, and was of the view that a majority of these tenders were not competitive as only one or two bids were received despite the presence of a large number of road contractors in each district. Accordingly, based on the observations made in the CAG’s report, CCI passed an order under Section 26(1) of the Act directing the DG to investigate the issue.

The DG sent notices to the officials of the Uttar Pradesh Public Works Department (‘UP PWD’) seeking information regarding the tenders floated for Gorakhpur and Basti, along with documents that would show the manner in which the decisions for tenders were taken. The DG also examined the issue of common partners and related ownership amongst various bidders registered with the UP PWD, and noted that there was no restriction on bidders or contractors to take part in the bidding process if they were registered with UP PWD as independent entities, even if two or more of such bidders had common partners or related partnerships. The DG further noted that while tendering documents revealed common bid prices in Basti and Gorakhpur, there was no evidence to corroborate and substantiate any bid rigging concerns. The DG also noted that there were no instances where the tenders were allotted at a cost higher than the internal cost estimated by the UP PWD.

Placing reliance on the DG’s findings and its previous orders, CCI noted that mere commonality of ownership of participating firms by itself is not sufficient to record any conclusion about bid rigging, particularly in the absence of any other material indicating collusion amongst such bidders while participating in tenders. On this basis, CCI closed its inquiry and passed an order under Section 26(6) of the Act.

[1] Suo Motu Case No. 03 of 2018, Order dated November 11, 2021.