CCI Imposes Penalty on Members of the ‘Ethanol’ Cartel

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Sep 30, 2018

CCI Imposes Penalty on Members of the ‘Ethanol’ Cartel

On September 18, 2018, CCI imposed a penalty on various sugar mills[1] and sugar mills trade associations (namely Indian Sugar Mills Association (‘INSA’), National Federation of Cooperative Sugar Factories Ltd. (‘NFCSF’) and Ethanol Manufacturers Association of India (‘EMAI’)), [2] operating in Uttar Pradesh, Gujarat and Andhra Pradesh, for rigging bids in relation to tenders floated by Public Sector Oil Marketing Companies[3] (‘PSU OMCs’/ ‘OMCs’), for procurement of anhydrous alcohol (‘Ethanol’) pertaining to 110 depots of the OMCs, spread across the country. The tenders were floated pursuant to the Ethanol Blended Petrol Programme (‘EBP Programme’) that was initiated by the Government of India.

The violations came to light pursuant to two separate complaints filed by India Glycol Ltd. and Ester India Chemicals Ltd., respectively (‘Informants’). Notably, the Informants had also alleged that even the act of issuing a joint tender for the purposes of procuring Ethanol, by the PSU OMCs was in violation of Section 3(1) and 3(3)(a) of the Act, in light of it being an agreement amongst horizontal players. CCI, based on its prima facie view of violations having taken place, clubbed the complaints together and directed the DG to investigate the allegations raised in the complained, through an order dated May 27, 2013 (‘DG Order’).[4] Pursuant to its investigation, DG submitted an investigation report to CCI, upholding the allegations raised in the complaints, however, NFCSF, PSU OMCs and Kisan Sahkari Chini Mills Ltd. were exonerated of the allegations.

[1] Sahakari Khand Udyog Mandal Ltd., Shree Ganesh Khand Udyong Mandali Ltd., Shri Kamrej Vibhag Sahaari khand Udyong Mandali Ltd., Shree Mahuva Pradesh Sahakari Khand Udyog Mandali Ltd., The Andhra Sugars Ltd., The Sarvarya Sugars Ltd., Bajaj Hindusthan Ltd, Triveni Engineering Industries Ltd., Simbhaoli Sugars Ltd., Avadh Sugar & Energy Ltd., Dhampur Sugar Mills Ltd., Balrampur Chini Mills Ltd., Mawana Sugars Ltd., KM Sugar Mills Ltd., Uttam Sugar Mills Ltd., Dalmia Bharat Sugar & Industries Ltd.., Seksaria Biswan Sugar Factory Ltd., Sir Shadi Lal Enterprises Ltd.
[2] India Glycols Limited v. Indian Sugar Mills Association & Ors., Case No. 21 of 2013; Ester India Chemicals Limited v. Bajaj Hindusthan Limited & Ors., Case No. 29 of 2013; Jubilant Life Sciences Limited v. Bharat Petroleum Corporation Limited & Ors., Case No. 36 of 2013; A B Sugars Limited v. Indian Sugar Mills Association & Ors., Case No. 47 of 2013; Wave Distilleries and Breweries Limited v. Indian Sugar Mills Association & Ors., Case No. 48 of 2013; and Lords Distillery Limited v. Indian Sugar Mills Association & Ors., Case No. 49 of 2013 (through common Order dated September 18, 2018)

[3] Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd.
[4] Subsequently, Case Nos. 36 of 2013, 47 of 2013, 48 of 2013 and 49 of 2013 were also clubbed with the ongoing DG investigation.

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