Dec 31, 2021

CCI Issues a Cease-and-Desist Order in a Cartel Formed for Supply of Low Density Polyethylene covers to Food Corporation of India

On October 29, 2021, CCI concluded that Shivalik Agro Poly Products Limited (‘SAPPL’), Climax Synthetics Private Limited (‘CSPL’), Arun Manufacturing Services Private Limited (‘AMSPL’) Bag Poly International Private Limited (‘BPIPL’), Shalimar Plastic Industries (‘SPI’) and Dhanshree Agro Poly Product (‘DAPL’) had collectively cartelised in the bids issued by the Food Corporation of India (‘FCI’) between 2005 – 2017.[1] SAPPL, CSPL, AMSPL, BPIPL, SPI and DAPL are collectively referred to as ‘OPs’.

FCI is a statutory authority under the administrative control of Ministry of Consumer Affairs, Government of India that implements different objectives of the National Food Policy. One of the objectives of the National Food Policy is to maintain a satisfactory level of operational and buffer stock of food grains. Low Density Polyethylene (‘LDPE’) covers are required by FCI for safeguarding the food grains stored in the open. FCI issues tenders for the purchase of LDPE on a periodic basis. In the information filed before CCI, FCI alleged that the OPs had cartelised in various bids issued by FCI. After examining the material available on record, CCI came to a prima facie view that the OPs had indulged in bid rigging in violation of Section 3(3)(d) of the Act and accordingly, directed the DG to investigate the issue. While the investigation was underway before the DG, leniency applications were filed by SAPPL, CSPL, AMSPL and BPIPL with CCI.

DG’s Findings

The DG in its investigation noted that, in 2005, an agreement was entered into by the OPs, under which OPs had to share the quantities of LDPE covers that each OP would quote to FCI in future tenders. The OPs even agreed to appoint arbitrators in case of any differences or issues that arise from this agreement. The DG further noted that to ensure that all six OPs get the quantities as per the decided ratio in their agreement, each OP would prepare a table showing the quantities received by the OPs post bid, actual quantities as decided in the agreement for each OP and differences of quantities on an annual basis. The DG also noted that the OPs had created a WhatsApp group named ‘Super Six’, the chats of which clearly proved the manner in which OPs coordinated with each other prior to the bids. The DG also noted that the OPs followed a compensatory mechanism, pursuant to which OPs agreed to compensate those entities that received lesser quantities (than what was agreed in the agreement) on an annual basis. On this basis, the DG concluded that OPs were involved in fixing the price of LDPE covers, limiting/restricting the supply of LDPE covers, sharing tender quantities, and thereby rigged the bids for the tenders floated by FDI in contravention of Sections 3(3)(a)/(b)/(c)/(d) of the Act.

CCI’s Findings

CCI, while reviewing the material on record, noted the agreement signed by the OPs for sharing of quantities of LDPE covers in different tenders floated by various governments on a pan-India basis. CCI also noted the methodology of sharing of quantities between OPs and the appointment of arbitrators in case of any differences or issues arising from the agreement. CCI also reviewed the calculation sheets which set out the arrangement between the OPs to compensate each other in case of receipt of lesser quantity than the agreed ratio of quantities. This, along with the statements given by the officials of SAPPL, CSPL, AMSPL and BPIPL, the WhatsApp chats retrieved from the phone of the officials of OPs, and their e-mail communications setting out the manner of bidding for tenders, were collectively relied by CCI to conclude that the OPs operated a cartel by fixing the price of LDPE covers, limiting/restricting the supply of LDPE covers, sharing tender quantities, and bid rigging of tenders of LDPE that were floated by FCI between 2009 – 2017. CCI also noted that once the existence of an anti-competitive agreement was established, there was no further requirement under the Act for CCI to prove actual AAEC. The existence of such agreement was itself presumed to cause AAEC. CCI also noted that none of the OPs were able to present any evidence that would rebut the AAEC presumption.

In sum, CCI found the OPs to have acted in contravention of Section 3(3)(d) of the Act and accordingly, passed an order under Section 27 of the Act. CCI, however, did not impose a penalty on any of the OPs taking into consideration the cooperation extended by SAPPL, CSPL, AMSPL and BPIPL (all of which had filed leniency applications) and equally considering the losses faced by all the OPs (being micro, small & medium enterprises) due to the COVID-19 pandemic.


[1] In re: Food Coproration of India v. Shivalik Agro Poly Products Limited and Others, Reference Case No. 07 of 2018, Order dated October 29, 2021.




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