COMPETITION COMMISSION OF INDIA

Case No. 10 of 2020

In Re:
Ved Prakash Tripathi Informant

And

1. Director General Armed Forces Medical Services Opposite Party No. 1

2. ECHS Khanpur. Opposite Party No. 2
3. Anant Pharmaceuticals Opposite Party No. 3
4. Saransh Biotech Pvt. Ltd Opposite Party No. 4
5. Aarav Pharmaceuticals Opposite Party No. 5
6. Laxmi Pharma Opposite Party No. 6
7. M C Pharma Opposite Party No. 7
8. Maa Ambey Enterprises Opposite Party No. 8
9. Goyal Pharma Opposite Party No. 9
10. MD Medical Store Opposite Party No. 10

CORAM

Mr. Ashok Kumar Gupta

Chairperson

Ms. Sangeeta Verma

Member

Mr. Bhagwant Singh Bishnoi

Member

ORDER UNDER SECTION 26(2) OF THE COMPETITION ACT, 2002

1. The present Information has been filed by Mr. Ved Prakash Tripathi,
(“Informant”) on 04.03.2020 under Section 19(1)(a) of the Competition Act,

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2002 (“the Act”) against Director General Armed Forces Medical Services
(“DGAFMS /Opposite Party No. 1/ OP-1”); ECHS Khanpur (“Opposite Party
No. 2/ OP-2”); Anant Pharmaceuticals (“Opposite Party No. 3/ OP-3”); Saransh
Biotech Pvt. Ltd (“Opposite Party No. 4/ OP-4”); Aarav Pharmaceuticals
(“Opposite Party No. 5/ OP-5”); Laxmi Pharma (“Opposite Party No. 6/ OP-
6”); M C Pharma ( “Opposite Party No. 7/ OP-7”); Maa Ambey Enterprises
(“Opposite Party No. 8/ OP-8”); Goyal Pharma ( “Opposite Party No. 9/ OP-
9”) and MD Medical Store ( “Opposite Party No. 10/ OP-10”) (collectively,
“Opposite Parties/ OPs”) alleging, contravention of the provisions of Section 3
of the Act .

2. DGAFMS was established in 1948 upon integration of medical services of the

Royal Indian Navy, the Indian Army and the Royal Indian Air Force. DGAFMS
was made directly responsible to the Ministry of Defence for the overall medical
policy in so far as they relate to the Armed Forces.

3. Ex-servicemen Contributory Health Scheme (“ECHS”), launched in 2003, is a

flagship scheme of the Ministry of Defence, Department of Ex-Servicemen
Welfare. The Scheme aims to provide allopathic and AYUSH medicare to Ex-
servicemen pensioner and their dependents through a network of ECHS
polyclinics, medical facilities and civil empanelled/government
hospitals/specified government AYUSH hospitals spread across the country. The
Scheme has been structured on the lines of Central Government Health Services
(“CGHS”) to ensure cashless transactions, as far as possible, for the patients and
is financed by the Government of India. The aim of the Scheme is to provide
quality healthcare to ex-servicemen pensioners and their dependents.

4. OP-3 to OP-10 are wholesalers and traders of pharmaceutical products.

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5. ECHS Khanpur issued general public information on 16.10.2018 regarding

registration/renewal of suppliers for the purposes of local purchase of medical
supplies and surgical expendable/non-expendable medical supplies/ equipments
for the financial year 2019-20. Applications were invited from firms for supply
of generic/branded medical stores under the following categories:

i) General medicines
ii) Laboratory kits and consumables
iii) General Surgical Consumables
iv) Dental materials and consumables
v) Medical equipments etc.

6. The firms/ vendors willing to supply medical stores under the aforementioned
categories were required to meet the prescribed criteria such as the firm should be
a reputed retailer/wholesaler and should possess wholesale/retail drug license,
should possess shop license, should be financially sound with total turnover of
pharmaceutical products at CFA decided level, should have adequate storage
facility etc. Further, the bidder needs to submit a list of documents for
registration such as income tax returns for the previous three years and GST
returns till date alongwith PAN/ TAN numbers, authorized dealership/stockist
certificates from reputed DGQA registered firms, audit report for last three years
etc.

7. Pursuant to this notice, around 22 firms/vendors, including OP-3 to OP-10,

participated in the tender. It has been alleged that only OP-3 to OP-10 could
qualify the technical bids whereas, technical bids of other participants were
rejected citing various reasons.

8. It is also alleged that OP-5 was selected despite the fact that the firm was
incorporated in 2018 and the requirement that the firms/vendors to submit

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Income Tax Returns for the last three years. It is further alleged that a vendor
with decades of experience such as Deep Pharmaceuticals was not selected on the
grounds that it submitted the audit report for only two years whereas, OP-5 was
selected in spite of submitting forged documents. Also, OP-4, which was
established only in the year 2015, participated and was recommended for
registration for the tenders floated in the years 2016-17, 2017-18 and 2018-19.

9. It is further alleged that OP-9 and OP-10 are located in the same area i.e.
Janakpuri market, New Delhi. Further, OP- 3 to OP-7 are proprietorship firms
closely held by members of Gupta Family and OP-8 to OP-10 are owned by
members of Goyal Family. In the tender issued in 2018-19 also, the same
vendors namely OP-4, OP-5, OP-6, OP-8, OP-9 and OP-10 were selected.

10. It is further alleged that the said firms have charged rates that are 1000 times
higher than the rates at which aforementioned medical supplies are available in
other army hospitals in Delhi.

11. The Commission has perused the Information and the documents filed therewith.
It is observed that the allegations levelled by Informant are essentially three fold
viz., selection of bidder who allegedly provided forged documents, commonality
of directors of technically qualified bidders and lastly, increase in prices of
medicines due to bid rigging.

12. With regard to selection of bidders who allegedly provided forged documents to
the procurer, the Commission observes that the Informant is at liberty raise such
issues before the appropriate forum and no directions can be issued by the
Commission in this regard.

13. In relation to the allegations regarding commonality of directors of the impleaded

firms are concerned, it is observed that mere commonality of directors or

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ownership of participating firms, in itself, is not sufficient to record any prima

facie conclusion about bid rigging in the absence of any material indicating
collusion amongst such bidders while participating in the impugned tender.
Moreover, though the Informant has alleged that OP-3 to OP-7 are held by
members of Gupta Family and OP-8 to OP-10 are controlled by Goyal Family,
the linkages between these two groups of families have not been brought out by
the Informant. Similarly, the circumstance that OP-9 and OP-10 are located in
the same area, in itself, is of no consequence in the absence of other material
establishing concerted behavior.

14. In this connection, it is observed that in the past also, while examining similar
allegations, the Commission held that merely having common directors cannot be
the basis to suggest collusion in the bidding process. In Re: Reprographics India
v. Hitachi Systems Micro Clinic Pvt. Ltd. (Case No. 41 of 2018), the Commission
held that: “…merely having common business linkages between the OPs as
projected by the Informant, cannot be the basis to suggest collusion in the
bidding process. Moreover, there is no material on record to suggest that the
OPs were engaged in Bid Rotation etc. Therefore, the allegation of supportive
bid does not find favour with the Commission…”

15. Resultantly, the Commission is of the opinion that, in the absence of any material
on record which can suggest collusion amongst the bidders, no case of
contravention of the provisions of Section 3(1) of the Act read with Section
3(3)(d) thereof is made out.

16. In view of the above, the Information is ordered to be closed forthwith in terms
of the provisions contained in section 26(2) of the Act.

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17. The Secretary is directed to communicate to the Informant, accordingly.

Sd/-
(Ashok Kumar Gupta)
Chairperson

Sd/-
(Sangeeta Verma)
Member

Sd/-
New Delhi (Bhagwant Singh Bishnoi)
Dated: 06/05/2020 Member

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