CCI Dismisses Allegations of Abuse of Dominance and Anti-Competitive Agreements against Hexagon Geosystems India Private Limited

On August 26, 2020, CCI passed an order dismissing the information filed by Sowil Limited (‘Sowil’) against Hexagon India Geosystems India Private Limited (‘Hexagon’) for contravention of provisions of Sections 3 and 4 of the Act.[1]

Sowil is a small scale company empaneled by the Ministry of Road, Transport and Highways for providing engineering consultancy services for the development of infrastructure projects. Sowil submitted that the Ministry of Railways, Research Designs and Standards Organization (‘RDSO’) had invited tenders for carrying out certain construction and repair work for Indian Railways. The potential bidder was required to distribute Safe Rail System services, which is a ground-penetrating radar (‘GPR’) system considered to be a fast and non-destructive way to inspect rail ballast, i.e., the stone foundation on which railways tracks are built. The tender issued required potential bidders to fulfil certain terms and conditions for participation. Sowil submitted that the ‘Safe Rail System’ marketed by Hexagon of Ingegneria Dei Sistemi (‘IGN’) was the only GPR system in the world that fulfilled the technical eligibility criteria required by the RDSO. Further, the prices quoted by Hexagon for providing the GPR services were exorbitant. Sowil relied upon an e-mail inadvertently shared by Hexagon with it where there was an internal discussion on adding an 80% mark-up over its purchase price. Such excessive pricing by Hexagon, the only technically eligible bidder, amounted to an abuse of its dominant position. Sowil further alleged that Hexagon contravened Section 3 of the Act by coordinating and requesting its international competitors to not partner with Indian companies to participate in the tender.

CCI noted that Hexagon was not the only bidder and the other bidders included (a) consortium of ZETICA Limited and Vandhana International Limited; (b) consortium of Hexagon Geosystems India Private Limited with Intergraph SG& I India Private Limited; and (c) consortium of Sowil with SIC Infraconsult GMBH. CCI also noted that there are at least 4 major global players in this market which included (a) Zetica Limited; (b) Ground Control Geophysik & Consulting GMBH; (c) SIC Infraconsult GMBH; and (d) M/s Loram. Given this market construct, Hexagon did not appear to hold any market power and CCI accordingly dismissed allegations of abuse of dominance.

 CCI further observed that Sowil did not submit any evidence to indicate any collusive conduct by Hexagon. Accordingly, no case of contravention of Section 3 of the Act was made out. CCI accordingly passed a closure order under Section 26(2) of the Act dismissing all the allegations.

 

[1] Case No. 14 of 2020, Order dated August 26, 2020.

Published In:Inter Alia Special Edititon - Competition Law - October 2020 [ English
Date: October 19, 2020