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CCI imposes penalties on 18 Sugar Mills, 2 Trade Associations

19 Sep 2018 Evaluate

The fair trade regulator, the Competition Commission of India (CCI) has imposed a total penalty of Rs 38.05 crore on 18 sugar mills and their two Trade Associations for rigging the bids of a joint tender floated by oil marketing companies (OMCs) for procurement of ethanol for blending with petrol. The two Trade Associations are Indian Sugar Mills Association (ISMA) and Ethanol Manufacturers Association of India (EMAI).

The regulator also issued a Cease and Desist Order against them. While imposing penalties, the Commission applied the principle of relevant turnover and based the penalties on the revenue generated by the sugar millsfrom sale of ethanol only. The penalty was imposed at 7% of the average relevant turnover of the sugar mills, while penalty at 10% of the average receipts was imposed upon the Trade Associations viz. ISMA and EMAI keeping in view the key role they played in facilitating bid rigging. 

The action was taken following a batch of informations filed by India Glycols and 5 other Informants. India Glycol alleged ISMA and EMAI for persuading the OMCs to come-out with a Joint Tender for the purpose of procuring ethanol. The said joint tendering by OMCs was alleged to be an agreement amongst horizontal players to procure ethanol from various suppliers in contravention of the competition act, causing adverse effect on competition within India in supply and distribution of ethanol.

It was also alleged that the sugar manufacturers, who had participated in the Tender of 2013, manipulated the bids by quoting similar rates and in some cases identical rates through an understanding and collective action, in violation of the competition laws.

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