Rajasthan Cylinders and Containers LTD

Rajasthan Cylinders and Containers Ltd. v. Union of India and Ors.
[2018(13)SCALE493]
Brief Facts
The present case pertains to the appellants, who are manufacturers of 14.2 Kg LPG Gas
Cylinders were allegedly indulging in anti-competitive practices such as collusive bid-rigging
and predatory pricing as per Section 3(3)(d) of Competition Act, 2002 on a tender floated by
Indian Oil Corporation Limited (IOCL) for supply all over the country.
In this tender total 62 members participated out of which 12 members were new members (who
had less than 3 years experience in manufacturing cylinders) and 50 members were experienced
ones who had also formed an association christened as Indian LPG Manufacturers
Association. Just days before the tender was to be floated, out of these 50 members, 19 members
participated in a meeting organised at a hotel in Mumbai.
When the tender was floated, many bids were found to be quoting the same price and thus it
raised speculations amongst one of the parties to the tender of the same being anti-competitive
and thus a complaint was registered against those 50 members to be engaging in clandestine
activities and rigging the bids of tender and also fixing the prices of bids thus rendering the
process to be anti-competitive and subsequently, the Competition Commission of India (CCI)
relying on the investigations carried out by the Director-General (DG) pursuant to the complaint,
imposed heavy penalties on the party (appellants in the present case). A subsequent appeal was
preferred by the appellants to Competition Appellate Tribunal (COMPAT), wherein the CCI's
order was upheld but reducing the quantum of penalty imposed on them.
Aggrieved by the Hon'ble COMPAT's order the appellants approached the Apex Court and CCI
also preferred an appeal against the reduction in the penalty as ordered by COMPAT.
Issues before the court
The primary issue before the court was whether the action of the bidders in submitting identical
bids and meeting shortly before the bid announcement amounts to collusive bidding or other
evidence is required.
Verdict of Apex Court
Due to lack of evidence of the appellants being engaged in anti-competitive practices, the order
was made in the appellants' favour and hence the appeal preferred by the Respondents against the
COMPAT's order for a reduction in penalty was also rendered infructuous since the appellants'
actions were not held to be anti-competitive.
Reasoning of the Court and Conclusion
The logic of the aforementioned verdict was that the appellants i.e. the Tender was floated by
only 3 PSUs in India and thus it was an oligopsony, and entire control was in the hands of IOCL
who chose the parties and only IOCL used to call the shots. It is pertinent to note IOCL was not
impleaded in the present case, who could give answers to several questions. It was also seen
that all the 62 members got some States in hand to supply their LPG cylinders i.e. even the
12 new members.
A lot of emphasis was laid on the meeting which was organised before the tender by the
respondents, but the Court could not find any conclusive evidence as in the meeting there were
many persons who were not even members of the association, and thus nothing of pertinence
could be arrived at.
The decision made by the Honorable Supreme Court will significantly contribute to the evolving
body of competition law jurisprudence. This ruling holds particular importance given the diverse
market situations in India, where numerous suppliers in different locations provide
goods/services to a limited number of buyers. Many of these suppliers operate in sectors
dominated or controlled by the government, such as mining, transportation of minerals, the steel
industry, and railways. Numerous cases involving such suppliers have been investigated and
charged for engaging in anti-competitive practices by the Commission, with their cases currently
pending at various forums.
This case will serve as a crucial test for the Appellate Tribunal, Commission, and DG to
determine whether an entity is involved in the aforementioned unfair practices. Additionally, it
will act as a guiding tool for the DG, necessitating a comprehensive assessment of the entire
market scenario before reaching conclusions against any entity.

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Rajasthan Cylinders and Containers Ltd. v. Union of India and Ors.

Issues before the court

Reasoning of the Court and Conclusion

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