Conspiracy- Price Fixing And Bid Rigging

Price fixing, bid rigging, and other cartel enforcement remains robust around the world. The European Commission (“EC”) and individual member states and others continue to engage in robust enforcement. The level of fines imposed by the EC exceeds last year’s record pace. Whereas Brazil remains Latin America’s leading antitrust enforcer and has recently adopted a high-profile leniency program, China is just starting to make use of its newly adopted laws. In fact, during 2013, the Chinese antitrust authority imposed a record individual fine of CNY 118 million ($19 million). This is the first individual fine in China to exceed the $1 million threshold. The Competition Commission of India (CCI) has imposed a fine of around Rs 6300 odd crores on 11 cement companies for forming a cartel. Penalty accounts for 50% of profits of financial years 2010 and 2011.

With increasing cases of price fixing there is a need to look into the aspects considered by Competition Authorities for finding the conspiracy theory amongst bidders. The Conduct that Authorities look for –

  • Competitive or friendly rivalry
  • Type of information exchanged about industry
  • How do you distance yourself from a cartel

On identical pricing and above stated supporting factors, presumption is in favour of rigging the bid unless rebutted to show you won on merit as lowest bidder.

CCI is investigating the following cases:

1. Indian subsidiaries of German braking complement builder Knorr Bremse and French railway apparatus builder Faiveley Transport have shaped a conglomeration to supply ‘Axle Mounted Disk-Break System’ for coaches during Railway Coach Factory. Competition Commission of India is looking into the circumstances which could be credible evidence for price-fixing[1].

2. Four industry bodies representing the steel and sponge iron industry in Karnataka alleged “cartelisation” by eight mine owners in the state, including Vedanta subsidiary Sesa Goa, to distort iron ore prices in the ongoing e-auctions{2}

3. Bhartia-group promoted petrochemical company Indian Glycols Ltd has filed three cases in the Competition Commission of India (CCI). Two were quashed while one is with the Supreme Court. In its appeal to the apex court, Indian Glycolshas alleged cartelisation by sugarmills and oil companies and submitted that with limited availability of molasses-based ethanol in the country, any diversion of ethanol e.g. Ethanol Blending Programme (EBP) “shall adversely affect the very existence of the chemical industry in India”3.

February 03, 2014 – Supreme Court issued notices to the Centre, the three oil marketing companies, the Indian Sugar Mills Association and others over the alleged bid rigging with respect to the (EBP).

Indian Glycols Ltd has alleged:

  • Cartelisation by the sugar mills and has termed meetings between the oil companies and the mills for price discussion and fixation of ethanol for blending with petrol was “anti-competitive”, due to which the petrochemicals industry faces higher prices and lower supply of ethanol because of its use in automotive fuel.The blending program reduces India’s oil demand and helps cane farmers and the sugar industry4.
  • That the difference in the market price and the ‘cartelised price’ of ethanol is between 15-30%, IGL said that with limited availability of molasses-based ethanol in the country, any diversion of ethanol “shall adversely affect the very existence of the chemical industry in India.”

4. Competition Commission in India is investigating alleged cartelization by 37 signaling cable manufacturers in the recent tenders floated by North Western Railway. The chief material manager of North Western Railway, a division of state-run Indian Railways, had alleged that:

Companies participating in tenders for procurement of signaling cables had acted in concert and quoted higher prices”.5

5. Competition Commission of India to investigate a further cartel conspiracy complaint against Jet Airways, SpiceJet, Air India, GoAir and IndiGo for ‘levying a uniform fuel surcharge on air cargo’. The complaint has apparently been lodged by the Express Industry Council of India, representatives of express courier and cargo companies5.

Fines imposed by CCI in the past

i. Cartel of 3 companies supplying spares to Diesel Loco Modernization Works, Indian Railways, Patiala, Punjab: CCI fined Stone, Faively Transport, Escorts Rs. 62.31 Cr in February 05, 2014

ii.Polyester blended duck ankle boot rubber sole cartel: CCI fined Rs. 625.43 lakhs in August 2013

iii.Supply of explosives for coal mining operations cartel: CCI fined Rs. 58.8 Cr in April 2012

iv.Supply of medical equipment’s cartel: CCI fined MDD, MPS & PES of Rs. 300 lakhs in April 2012

v.LPG cylinder manufacturers cartel: CCI fined Rs.165 Cr in Feb 2012

Some Recent Judgment’s in Other Jurisdictions:

1. The Royal Court of Justice Strand, Londonheld in H. Newson Holding Limited & ors v IMI plc & ors[7] that follow-on proceedings under S.47A Competition Act 1998 may be brought for the tort of conspiracy only if the relevant decision contains a specific finding that the defendant intended to injure the claimant. In the Newson litigation[8], Mrs. Justice Rose held that a defendant cartelist to a S.47A claim may sue another cartelist for contribution even if the original claimant could not himself have sued that other cartelist under s.47A.

2. Cathay Pacific Airways Ltd. has been fined $1.5 million by an Ontario court, Canada after pleading guilty to an air cargo price-fixing conspiracy.

3. Competition Bureau announced on August 20, 2014 that LATAM Airlines Group S.A. (LATAM), the parent company of LAN Cargo S.A., pleaded guilty to criminal conspiracy under the competition Act.

Cartelization is a Criminal Offence in UK

Since June 20, 2003, it has been a criminal offence under the Enterprise Act 2002 (the Enterprise Act) for individuals to dishonestly engage in certain ‘hardcore’ cartel activity.

This view was confirmed in Norris v Government of the United States of America and Others (Goldshield Group plc and Another Intervening)9 when the Divisional Court concluded that the ‘not yet rusty and still trusty weapon’ of conspiracy to defraud could be used to combat dishonest price-fixing.

Immunity from both types of enforcement (civil and criminal) is potentially available under the OFT’s leniency policy (for companies) and no-action policy (for individuals), provided that stringent conditions are met.10


  3. dium=text&utm_campaign=cppst
  8. [2013] EWHC 3788
  9. [2013] EWCA Civ 1377
  10. [2007] EWHC 71 (Admin), [2007] 1 WLR 1730.

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