Sep 14, 2018

CCI Imposes Penalty on Sports Broadcasters for Bid-Rigging

On July 11 2018, CCI passed an order under Section 27 of the Competition Act against Globecast India Private Limited and Globecast Asia Private Limited (‘Globecast’) and Essel Shyam Communication Limited (‘ESCL’) for manipulating the bidding process in tenders floated by sports broadcasters.[1]As per the information provided by Globecast, it had exchanged confidential commercial and price sensitive information with ESCL, which led to bid rigging in tenders for procurement of broadcasting services of various sporting events, especially during the year 2011-12. The arrangement between ESCL and Globecast was facilitated by a consultancy agreement under which certain employees Globecast employees received a share in profits from the contracts obtained through the collusion.In its report, the DG analysed several communications between the impugned parties to establish concerted action in the bids submitted for provision of broadcasting services for certain ad hoc sporting events in India during 2011-12, amounting to infringement of Section 3(3)(d) read with 3(1) of the Competition Act.CCI analysed each of the sporting events for which the impugned bids took place to arrive at a conclusion. CCI noted that for each of the events under examination, there was an exchange of commercially sensitive information between ESCL and Globecast that allowed them to co-ordinate their bids. CCI held that the conduct of the two parties adversely affected the competitiveness of the bidding process amounting to a contravention of Section 3(3)(d) of the Competition Act.CCI imposed penalty on ESCL (₹ 319.4 million) and Globecast (₹ 13.2 million) at the rate of 1.5 times of their total profit for the period of contravention. It also penalized 8 individual office bearers of ESCL and Globecast for their role in the collusion at the rate of 10% of their average income in the three financial years preceding initiation of the case. However, since both the parties were leniency applicants, and had assisted in the investigation, CCI granted a 100% reduction in the penalty on Globecast and its office bearers, and 30% to ESCL and its office bearers.[1]Suo Moto Case 02 of 2013.

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