Competition Comm finds no violations in UP sugar mills sale

Competition Commission has concluded that no bid-rigging was involved among eight firms that participated in bidding during the sale of the state government sugar mills in Uttar Pradesh over six years ago.
The matter pertains to the sale of as many as 21 operational and non-operational sugar mills by the Uttar Pradesh State Sugar Corporation Ltd (UPSSCL) and its subsidiary UPRCGVNL. These transactions took place during 2010 and 2011.
Taking note of certain observations made by the Comptroller and Auditor General (CAG) regarding the sale in an audit report for the 2010-11 period, the Commission suo-motu began looking into the matter to ascertain, whether there have been any bid-rigging.

The latest ruling of the Competition Commission of India (CCI) has come more than four years after it ordered a detailed probe into the matter. The investigation was ordered in 2013.
In an audit report, the CAG had observed that in the bidding by firms for the sugar mills of UPSSCL and UPRCGVNL (Uttar Pradesh Rajya Chini Evam Ganna Vikas Nigam Ltd), there was lack of competitive process and the bidders were engaged in the bid-rigging activities.
Such activities violate provisions in the Competition Act.

While ten operational mills of UPSSCL were sold during 2010, eleven closed mills of UPRCGVNL were sold in 2011.

Wave Industries, PBS Foods, Indian Potash, Nilgiri Food Product, Trikal Food and Agro, Giriasho Company, Namrata Marketing and SR Buildcon had participated in the bidding.
CCI said that given the tender conditions and the methodology adopted for inviting bids for the sale of sugar mills, it was open for any bidder who satisfied the eligibility criteria.
The Director General (DG) has found no evidence of collusion or coercion which prevented the potential bidders from participating, it said in an order dated May 4.
Cases where the regulator finds prima-facie evidence of competition norms violations are referred to its investigation arm DG for detailed probes.

On the basis of facts and evidence in the case, no conclusion of contravention of the Competition Act can be drawn against the participating bidders in the sale of ten operational mills of UPSSCL, according to CCI.
"The fact that there is no evidence of collusion or coercion to show that several potential bidders were prevented from participating in the bidding process for the sale of closed mills rules out possibility of premeditation of outcome by the participating bidders and hence collusion by them," CCI said with respect to eleven closed mills of UPRCGVNL.
The bidders had raised issues relating to applicability of Section 3 on the sale of sugar mills, thereby, challenging the jurisdiction of the CCI in the case.

The regulator opined that in absence of a finding of collusion/bid rigging in the case, there remains "no immediate requirement" to deal with the jurisdiction issue.
However, in a supplementary note, CCI member Augustine Peter said the regulator has jurisdiction to entertain the case.