On November 9, 2018, CCI dismissed allegations of bid rigging against Hitachi Systems Micro Clinic Private Limited (‘Hitachi’) and IL and FS Technologies Limited (‘IL&FS’). [1] The allegations against Hitachi and IL&FS were under Section 3(3)(d) of the Act in the information filed by Reprographics India, through Mr. Deepak Khanna (‘Reprographics India’). Reprographics India is an ancillary unit of Bharat Heavy Electricals Limited (‘BHEL’) being a distributor of Information Technology (‘IT’) products either directly or through System Integrators of Original Equipment Manufacturers (‘SIs’). Reprographics India alleged that Hitachi and IL&FS were guilty of bid rigging in the tender floated by BHEL on April 1, 2017, for supply, installation and maintenance of personal computers, servers, printers, uninterrupted power suppliers, network equipment and other computer peripherals throughout India, at more than 20 locations. Tenders were floated by BHEL for items categorized in two different groups – group A and group B. Hitachi works in close collaboration with leading Original Equipment Manufacturers and IL&FS provides IT solutions for efficient citizen service delivery through smart governance and infrastructure.

The allegations and their consideration by CCI are as follows:

(i)      There were only two bidders (for the tender of items in group A) and both the bidders have connections/were partners of Hewlett Packard (‘HP’). It was alleged that this indicates meeting of the minds between Hitachi and IL&FS while bidding for the tenders. However, CCI held this allegation to be prima facie not convincing since the tender was open and without embargo on any SI to participate. Moreover, in the tender for group B, four bidders had participated. CCI held that low participation may not necessarily be indicative of or be an outcome of any concerted action.

(ii)     It was alleged that IL&FS submitted a ‘supportive bid’ in favor of Hitachi because they have common business linkages. CCI was of the view that mere existence of common linkages between Hitachi and IL&FS cannot be the basis to suggest collusion in the bidding process, in the absence of material on record to show bid rotation, etc.

(iii)    The CCI held that documentary proof showing that officials of one party earlier worked with another party did not indicate proximity or meeting of minds. CCI opined that a person working in one IT firm will move to another IT firm and this activity does not tantamount to meeting of minds between the bidders.

(iv)     The allegation that Hitachi quoting majority items of HP for the tender suggests meeting of minds was also rejected by the CCI. CCI opined that such an action was a unilateral action on Hitachi’s part.

(v)      It was finally alleged that the quantum of discount given by Hitachi to BHEL post winning the tender is suggestive of the bid not being an independent bid was also rejected by CCI. To arrive at this conclusion, CCI considered BHEL’s submissions that the process followed for arriving at the final price was as per statutory guidelines and was reduced during negotiations between BHEL and Hitachi. According to BHEL, this was done to keep the final price within BHEL’s decided estimate.

In light of the reasons mentioned above, CCI found no contravention of Section 3(3)(d) read with Section 3(1) of the Act and dismissed the allegations.

[1] Case No. 41 of 2018.