There could be competition concerns, in cases where a monopoly buyer exercises the option in an anticompetitive manner by putting in unfair or discriminatory T&C in the tender documents
The Competition Commission of India (CCI) on 29 December 22020 dismissed the Information filed by Yogesh (Informant) under Section 19(1)(a) of the Competition Act, 2002 (Act) against Municipal Corporation of Greater Mumbai (MCGM) and others (Opposite Parties, OPs) alleging violation of the provisions of the Act.
The Informant in the instant case is an employee of Bucon-Gypsum-Bitcon JV, i.e. OP-8, who was aggrieved on account of rejection of bid of Bucon-Gypsum-Bitcon JV for ES-344 Tender by MCGM on the ground of non-fulfilment of tender conditions requiring the submission of MoU for Pulse Plasma Technology.
The Informant had alleged that this tender condition, inserted as a pre-qualification criterion by MCGM was unfair, discriminatory and anti-competitive and that by inserting such a condition in the ES-344 Tender, MCGM had contravened the provisions of the Act.
The Commission observed that the allegations related to the contravention of the provisions of Section 4 of the Act which proscribes abuse of dominant position. However, the Informant had neither alleged dominance of MCGM nor delineated any relevant market for the purpose.
According to the CCI, the Informant had merely alleged that the tender condition that required a contractor to have an MoU for Pulse Plasma Technology, which purportedly can be obtained only from one entity in India, i.e. Dattatreya Inc., since it is the only approved agency of 'B&B Engineering Co.', which, in turn, is the only agency authorized by KAPRA for use of Pulse Plasma Technology to undertake the project of rock excavation, was unfair, discriminatory and anti-competitive as it had made the technical eligibility of bidders' dependent on one agency, i.e. Dattatreya Inc. and limited the ability of bidders to participate in the tender.
It was observed that in the instant case, the procurer required the contractor to use a specific technology which was available for use by contractors only upon signing an MOU with the agency of KAPRA. Normally, from a competition law perspective, a procurer, who is essentially a consumer of services, has the choice to procure goods or services as per its needs and requirements.
For an individual consumer, its choice is based on the personal assessment of competing products or services, their relative prices or personal preferences. In the case of public procurers such as MCGM, such process of decision making in the exercise of its choice as a consumer is more structured and reflected in procurement procedures.
However, there could be competition concerns, which may require examination under the framework of the Act, in cases where a monopoly buyer exercises the option in an anticompetitive manner by putting in terms and conditions in the tender documents which are demonstrably unfair or discriminatory.
In this backdrop, the Commission noted that it was not the case of the Informant that MCGM is a dominant procurer or has otherwise abused its dominant position in any relevant market. Coming specifically to the assertion of the Informant that inclusion of the impugned condition had limited the ability of bidders to participate in the tender, the Commission noted that a letter of IVL India Environmental R & D Pvt. Ltd., a firm which scrutinised the bids for ES-344 Tender received by MCGM showed that at least four bidders had participated in the bid process, namely, Bucon-Gypsum-Bitcon (JV), i.e. OP8, MEPL-MB JV(JV), N.A. Construction and S. S. Associates (JV), of which all, except Bucon-Gypsum-Bitcon JV, were found responsive.
This indicated that three out of four bidders were able to meet the criteria of the procurer. Thus, it was not evident from the Information as to why and for what reasons, the employer of the Informant, i.e. Bucon-Gypsum-Bitcon JV could not obtain the MoU. Be that as it may, the Commission noted that, in the present case, since the tender condition had been met by more than one bidder, the allegation of the Informant that criteria laid down by the procurer had limited the ability of the bidders to participate, was not borne out from the facts of the present case.
It was also opined that the instant Information had not been filed by Bucon-Gypsum-Bitcon (JV) itself but by its employee who had rather made it an opposite party in the matter, i.e. OP-8.
It was also not understood as to how the Informant could allege any perceived difficulty in participating the tender due to the impugned condition, by its employer, i.e. OP-8 when such entity itself had not approached the Commission making any grievance in this regard.
It was further noted that apart from MCGM and OP-8, the Informant had impleaded other parties as opposite parties in the matter, i.e. OP-3 to OP-7; however, he had neither alleged contravention of provisions of the Act by them nor provided any rationale for including them as such parties in the matter.
The Commission also stated that the Informant had alleged that the tender condition was in violation of the CVC Guidelines. In this regard, it was noted that mere contravention of the CVC Guidelines, in the absence of any material showing contravention of the provisions of the Act, does not ipso facto imply violation of the provisions of the Act.