The Competition Commission of India (CCI) on Tuesday slapped a total penalty of Rs 38.05 crore on 18 sugar mills and their trade associations for rigging the bids of a joint tender floated by oil marketing companies (OMCs) namely IOCL, HPCL and BPCL on January 2, 2013.

Share Market Live

NSE

Passing an order, the watchdog has directed the sugar mills and their trade associations “cease and desist” from anti-competitive practices.

According to the regulator, "Indian Sugar Mills Association and Ethanol Manufacturers Association of India persuaded the OMCs to come-out with a joint tender for the purpose of procuring ethanol and this agreement to procure ethanol from various suppliers in contravention of the provisions of Section 3 of the Competition Act, 2002, which was likely to cause appreciable 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 Joint 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 provisions of Section 3 of the Act," the regulator said in a statement.

While imposing penalties, the commission applied the principle of relevant turnover and based the penalties on the revenue generated by the sugar mills from sale of ethanol only.

The penalty was imposed by the commission at 7 percent of the average relevant turnover of the sugar mills.

However, penalty at 10 percent of the average receipts was imposed upon the trade associations keeping in view the key role they played in facilitating bid rigging.