On September 15, 2022, pursuant to a complaint filed by Tamara Technologies Pvt. Ltd. (‘Informant’) and the DG’s investigation in consequence thereof, the CCI dismissed allegations of cartelization against Teesta Distributors & Others.^[1]

The Informant levelled allegations against Teesta Distributors (‘OP-l’), N.V. International (‘OP-2’), Ecool Gaming Solutions (‘OP-3’), Summit Online Trading Solutions Pvt. Ltd (‘OP-4’) and Government of Mizoram through the Director, Institutional Finance and State Lottery (‘OP-5’). (collectively, referred to as ‘OP’s’)

By way of background, it was submitted in the information that the Government of Mizoram through the Director Institutional Finance and State Lotteries (‘IFSL’) issued an Expression of Interest (‘EOI’) dated December 13, 2010, to appoint lottery distributors/selling agents for paper and online lotteries of the State of Mizoram. However, this EOI dated December 13, 2010, was withdrawn. IFSL issued a fresh EOI dated March 9, 2011, inviting bids for conducting the lottery business of State of Mizoram for all kinds of paper and online lotteries. In the bid, 24 bidders, including OP-1 to OP-4 and their affiliates and associates participated. A case was filed in the Gauhati High Court against the bidding process. Subsequently, the EOI dated March 9, 2011, was also withdrawn.

After withdrawal of EOI dated 09.03.2011, OP-5 invited bids for online and paper lotteries with bumper draws, against an EOI dated 20.12.2011 for the appointment of lottery distributors and selling agents for the lotteries organised by the Government of Mizoram in terms of the Mizoram Lotteries (Regulation) Rules, 2011. Altogether, five bids were received from different firms/companies, out of which one bid which did not bear any address was rejected in the initial stage, while the other four bids (bids of OP-1 to OP-4) were found valid. Later, after negotiation, OP-2 to OP-4 were appointed as the online lottery selling agents, while OP-1 was appointed as an agent of paper lottery at the renegotiated rate of total ₹10,990/- per draw (which includes ₹10,500/- per draw plus ₹400 per draw as draw expenses).

The CCI ordered an investigation by way of the Order dated May 29, 2012, considering the facts projected in the Information indicated the existence of a cartel amongst OP-1 to OP-4, while rejecting any case to be made out under Section 4 for abuse of dominant position levelled by the Informant.

The CCI in its analysis for the present case took the opinion that the conclusions drawn by the DG are based on identical quoting of bids by OP-1 to OP-4. In this regard, the CCI observed that this aspect stands explained from the replies furnished by these OPs as well as the response provided by OP-5, i.e., the Government of Mizoram. It seemed that OP-1 to OP-4 quoted ₹10,000/- per draw, which was also the base price as per the extant rules. Therefore, there is no doubt that there did not appear to be any competitive bidding amongst the OPs, but such parallel conduct in itself cannot be equated with collusion so as to return a finding of bid rigging by the CCI in the absence of any plus factors or corroborative evidence, particularly when such benchmark was already available and known to all potential bidders. The CCI concluded by noting that the investigation did not bring about any cogent evidence on record to demonstrate prior concert or consultation amongst OP-1 to OP-4 to quote the statutorily prescribed minimum amount.

With regard to the DG’s observation that there existed a relationship between OP-1 and OP-2 (that they are indirectly associated with each other and both of them had made Future Gaming Solutions Pvt. Ltd. as their sub-stockist) the CCI found merit in the submission made by OP-2 that appointing a stockist is a commercial decision and it runs the lottery business as an intermediary between the Government and the sale operator. OP-2 also submitted that its business model is not to sell directly in the market but through a stockist or a distributor and, as part of the said business model, it took security from such distributor.

Lastly, the CCI noted that it is a common practice that negotiations are held by the procurer with the successful bidders for further discounts/concessions. The same were also held in the present case, on May 22, 2012, whereby the Government of Mizoram negotiated the bid amounts and succeeded in enhancing the bids.

In light of the above, CCI dismissed the complaint.

[1] Case No. 24 of 2022.