CCI fines HP over Rs 138 Crore for rigging Government tenders

The Competition Commission of India (CCI) has imposed a cumulative penalty of Rs 138.85 crore on HP India Sales Pvt. Ltd. after finding that it coordinated with its authorised resellers to manipulate government procurement through the Government e-Marketplace (GeM). In two separate orders, the Commission concluded that HP rigged tenders involving personal system products and printer supplies by controlling reseller participation, selectively issuing Manufacturer Authorisation Forms (MAFs), facilitating cover bids, and coordinating bid prices. 

The CCI imposed a Rs 126.87 crore penalty in the personal systems case and Rs 11.98 crore in the printer supplies case. It also directed HP, the contravening resellers and the individuals held liable under the Competition Act to cease from engaging in similar conduct.

How HP coordinated bids through resellers: The proceedings arose from a lesser penalty application filed by HP, following which the Commission ordered the Director General (DG) to investigate GeM tenders floated by government procurers in Delhi. The investigation was later expanded to examine additional tenders meeting the Commission’s threshold.

What the CCI found:

• The DG examined GeM tenders involving HP’s personal system products and found evidence of collusion in seven tenders.
• According to the Commission, HP officials communicated bid prices to authorised resellers and instructed them on the prices they should quote in specific tenders.
• HP also restricted the issuance of Manufacturer Authorisation Forms (MAFs), enabling only selected resellers to participate in particular tenders.
• The Commission found that HP directed resellers to submit support or cover bids, while keeping itself informed of the prices quoted by competing resellers.
• It rejected HP’s argument that it shared only a vertical relationship with resellers, holding that both HP and its authorised resellers competed against one another in GeM tenders and therefore operated as competitors while bidding.

The printer supplies case: According to the Commission, the conduct stemmed from arrangements that existed before GeM, when designated Tier-2 resellers serviced specific government departments under what participants referred to as Most Valuable Customer (MVC) accounts. After government procurement shifted to GeM, incumbent resellers sought to retain those accounts despite open competition.

What the CCI found:

• The Commission found evidence that HP officials and authorised resellers coordinated bids to preserve designated MVC accounts after GeM introduced competitive bidding.
• It found that HP selectively issued MAFs so that only preferred resellers could participate in tenders linked to particular departments.
• The investigation uncovered emails, WhatsApp conversations and statements showing resellers sought support bids from one another and coordinated participation in GeM tenders.
• Several resellers admitted attending…