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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

Several infrastructure contractors in Gujarat privately agree on who will submit the lowest bid for a municipal road tender, while the others submit higher cover bids. What is the correct classification under section 3 of the Competition Act, 2002?

The arrangement is bid rigging under section 3(3)(d), because competing contractors agreed in advance who would win and manipulated the bidding process. It is presumed to have an appreciable adverse effect on competition and is void under section 3(2).

  1. ABid rigging under section 3(3)(d), presumed to have an appreciable adverse effect on competitionCorrect
  2. BAn exclusive distribution agreement under section 3(4)(c)
  3. CA refusal to deal under section 3(4)(d)
  4. DA permitted joint venture under the first proviso to section 3(3)

Explanation

Bid rigging means an agreement between enterprises engaged in identical or similar trade that eliminates or reduces competition for bids or manipulates the bidding process. Section 3(3)(d) covers agreements resulting in bid rigging or collusive bidding and raises the presumption of appreciable adverse effect. The joint venture proviso applies only where the agreement increases efficiency, which is not the case here.

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