Procurement Independence Undermined: CCI’s Findings on Bid-Rigging in soil testing tenders- upheld

On 23 September 2025, the National Company Law Appellate Tribunal (NCLAT) upheld the CCI’s findings that Austere Systems Pvt. Ltd (Austere), Fimo Infosolutions Pvt. Ltd (Fimo)., M/s Toyfort (Toyfort), and Delicacy Continental Pvt. Ltd (Delicacy). had engaged in bid-rigging in soil testing tenders issued by the Department of Agriculture, Government of Uttar Pradesh.[1]

The CCI found that these entities submitted bids that were not intended to compete but to create the appearance of competition and ensure contract awards to Austere. Several bidders lacked prior experience or infrastructure in soil testing, and bid documents and earnest money deposits were exchanged among them. These elements supported the finding of cover bidding, where bids are submitted to meet formal tender requirements while facilitating a predetermined outcome.

The NCLAT rejected the defence that the parties were “first-time bidders” or formed a “single economic entity.” It held that related-party status does not exempt firms from competition law obligations, especially where independence in bidding is compromised. The Tribunal also affirmed the CCI’s decision to compute penalties based on total turnover, rejecting the argument that penalties should be based on “relevant turnover.” It noted that applying the relevant turnover standard would have resulted in zero penalty for several entities viz. Fimo Infosolutions, Toyfort, and Delicacy Continental, as they had no turnover in the soil testing business, despite clear evidence of collusive conduct. This approach, the Tribunal emphasized, would undermine deterrence and allow firms to escape liability merely by lacking revenue in the specific product market affected.

Business Takeaway: The judgment reinforces that even informal coordination among related entities, absent direct price-fixing, may constitute bid-rigging if it undermines competitive independence in public and commercial procurement. Companies involved in procurement should document that all bids, quotations, and commercial decisions are taken independently and without coordination or information exchange with other participants, even if those participants are rivals only in the context of the specific tender.

[1] Supreme Court: CCI v. Kerala Film Exhibitors Federation & Ors. Civil Appeal No. 9726 of 2016 order dated 26 September 2025