CCI: Abuse of dominant position Under Section 4 requires delineation of relevant market & establishment of dominance of enterprise in the relevant market

CCI: Abuse of dominant position Under Section 4 requires delineation of relevant market & establishment of dominance of enterprise in the relevant market

The Competition Commission of India (CCI), led by Chairperson Ravneet Kaur and Members Sangeeta Verma and Bhagwant Singh Bishnoi closed a complaint against the Central Government Health Scheme (CGHS) for alleged violation of Competition Act, 2002.

The CCI held that the decision by CGHS to select one bidder and reject the bid of the Informant cannot be considered abusive under Section 4 of the Act. The Commission observed that though for an examination of allegations from the perspective of abuse of dominant position in terms of Section 4 of the Act requires delineation of relevant market and establishment of dominance of the enterprise in the relevant market so defined.

The CGHS, responsible for providing medical care facilities to Central Government employees, pensioners, and other beneficiaries, conducted an E-tender to appoint Authorized Local Chemists (ALCs) for supplying Allopathic medicines to CGHS Wellness Centres in Dehradun. The Informant, one of the bidders, raised allegations against CGHS in relation to the tender process.

The Informant claimed that CGHS delayed decrypting the technical bids of all participating bidders, which could have allowed them to observe any irregularities in the tender process. CGHS justified this delay, stating it was intended to discourage bidders from scrutinizing the process.

Additionally, the informant alleged that despite irregularities in the bid submitted by ‘Goel Medicos,’ CGHS accepted their bid, even though it did not meet the eligibility criteria outlined in the tender document.

The Informant pointed out various irregularities in ‘Goel Medicos’ bid that CGHS allegedly ignored, such as incorrect name on the Earnest Money Deposit (EMD), not fulfilling the required drug license criteria, submitting the wrong ITR, and failing to furnish the audited balance sheet. He also stated that the inspection of ‘Goel Medicos’ premises did not follow the provisions outlined in the tender document.

Furthermore, he alleged that CGHS rejected their competitive bid on vague grounds, including issues with the printer, bar code reader, and empty medicine boxes. The Informant claimed that CGHS did not address their representations regarding these irregularities, resulting in the elimination of competitive bids and causing irreparable loss to them.

Based on these claims, the Informant alleged that CGHS's actions were in violation of Sections 3 and 4 of the Act and accused it of abuse of its dominant position and requested CCI to issue a notice to CGHS, and the Director General, CGHS, New Delhi, to examine the eligibility of bidders in the E-tender. The informant also sought interim relief under Section 33 of the Competition Act, 2002.

The CCI reviewed the complaint filed against CGHS and found that the provisions of Section 3(1) of the Competition Act, read with Section 3(3), do not apply to this situation. Section 3(3) of the Act requires an agreement between two or more enterprises engaged in identical or similar trade of goods or services, which was not alleged in this case.

Additionally, there were no allegations of bid rigging, nor did the facts suggest any collusion among bidders in response to the E-tender.

Upon analyzing the abuse of the dominant position under Section 4 of the Act, the CCI noted that delineating the relevant market and establishing the dominance of CGHS in that market would be required.

However, while considering the circumstances of the present case and CGHS’s alleged conduct, defining the relevant market would not serve any purpose, remarked the CCI.

The Commission concluded that CGHS's selection of one bidder and rejection of the informant's bid could not be considered abusive under Section 4 of the Act. The Informant did not allege any unfair or abusive tender conditions either.

Consequently, the CCI found no evidence of a contravention of the Act. Accordingly, the CCI closed the complaint as there was no prima facie case of violating the provisions of the Competition Act.