Sahuwala Cylinders Pvt. Ltd. v. Competition Commission of India
In the National Company Law Appellate Tribunal
Competition Appeal (AT) 39/2019
Before Justice Rakesh Kumar, Judicial Member and Dr A.K. Mishra, Technical Member
Decided on November 10, 2022

Relevancy of the Case: Existence of a common IP address in bids as an indication of cartel formation under the Competition Act, 2002

Statutes and Provisions Involved

• The Competition Act, 2002 (Section 3, 4, 19, 22, 23, 26(1), 36(3), 40, 41(2), 45, 46, 53B, 53E, 64)
• The Indian Penal Code, 1860 (Section 191, 193)
• The Income Tax Act, 1961 (Section 23A)

Relevant Facts of the Case

• HPCL floated two e-tenders for the supply of LPG cylinders. The second one was delayed, leading to the withdrawal of bids by 51 out of the 61 bidders. Some bidders stated the reasons for their withdrawal, while others did not provide any explanation.
• An anonymous complaint alleged the vendors’ involvement in collusive bidding in contravention of Section 3(3) of the Competition Act, 2002.
• A comparison of the price bids submitted by vendors showed a similar pattern in the price bids.
• The Commission directed the Director General to investigate the matter.
• During the investigation, several issues emerged. The existence of common IP addresses for the withdrawal of bids and common agents working for LPG cylinder manufacturers were the most prominent.

Prominent Arguments by the Advocates

• The appellant’s counsel argued that the Director General had to submit the report in 60 days. However, it took him 984 days to submit the report, which is time-barred. Further, the counsel argued that the Commission cannot assume jurisdiction on anonymous complaints under Section 19(1)(a) of the Competition Act, 2002.

Opinion of the Bench

• Dealing with anonymous complaints under the Competition Act, 2002, is not proper in the eyes of the law. However, the Director General has already completed a detailed investigation into this matter.
• The Commission has the necessary powers to grant appropriate time to the Director General to complete the investigation.
• Using a common IP address signals sharing common and strategic information with other bidders. This violates Section 3(3)(d) of the Competition Act, 2002.
• It is safe to conclude that the cartel existed among the bidders. However, the Commission can reconsider the penalty imposed.

Final Decision

• The tribunal upheld the Commission’s order about the existence of the cartel but directed the Commission to review the penalty after hearing all the parties.

Aditi Mangesh Sawant, an undergraduate student at NMIMS Kirit P Mehta School of Law, Mumbai, and Ritesh Karale, an undergraduate student at Maharashtra National Law University, Mumbai, prepared this case summary during their internship with The Cyber Blog India in January/February 2024.