In what may be a first, the Competition Appellate Tribunal (Compat) has upheld the R165- crore penalty (7% of turnover) imposed by the Competition Commission of India (CCI) in February on 48 LPG cylinder makers after it found them indulging in cartelisation and manipulation of tenders floated by Indian Oil Corporation last year.
This is significant because in similar matters (appeal against CCI orders) including penalty on DLF (R660 cr) or 11 Cement companies (R6,303 cr), Compat has stayed the CCI order thereby giving interim relief to the petitioners till the matter was fully argued.
Hearing the plea of the LPG cylinder makers who had challenged the CCI order, Compat refused to grant “blanket stay” on the CCI penalty. Instead, Compat gave the 48 cylinder makers four weeks to comply else face automatic dismissal of their appeal.
The LPG cylinder makers had earlier challenged the order before Compat demanding a blanket stay on the CCI order. Compat gave its interim order 10-days ago while fixing the next hearing in December.
In the order, Compat refused to stay the penalty imposed on the LPG cylinder makers and instead asked them to deposit 10% (R16.5 crore) in cash and rest in security deposit till the next hearing in December.
The cylinder makers have got four weeks to comply. ?Any non-compliance with this order shall result in automatic dismissal of the appeal without further reference to this tribunal,? Compat said in the order.
The legal representatives arguing the matter on behalf of the 48 cylinder makers favoured a “blanket stay” on the CCI order terming it “wholly unjustified”.
However, passing the order, Compat said: “We do not at this stage want to express any opinion on the merits or demerits of the impugned order by the CCI. We would thus not pre-judge the issues involved. However, in our opinion a blanket stay is not possible as has been advocated by the learned counsel, for the simple reason that much can be said in favour of the impugned order.?
On its part, the lawyers arguing on behalf of the 48 LPG cylinder makers said that CCI had erred while imposing 7% of turnover as penalty because CCI treated all the cylinders manufacturers as equals whereas all companies are different in size, capacity and status. ?Some of the lawyers said that the director general of investigations under CCI had committed error in not enquiring BPCL and HPCL and merely focused on IOCL for arriving at a decision which led to the penalty. This was wrong,? said a legal expert familiar with the matter.
Earlier in February CCI had imposed a penalty of R165.58 crore on 48 LPG cylinder makers for forming a cartel while bidding during the tenders floated by IOCL in 2010-11. The competition watchdog had imposed the penalty after finding them guilty of manipulating the bids and quoting “identical rates in groups through an understanding and collusion action”. The ruling was based on the findings of the CCI’s director general (investigations).
