CCI Closes Complaint Of Anti-Competitive Practices Against 35 Universities And Lok Sabha Secretariat, Citing No Contravention Of The Competition Act

The case was filed against thirty-five universities and Lok Sabha Secretariat (Opposite Parties), alleging contravention of the provisions of Sections 3 and 4 of the Act.

Brief Facts:

The Informant stated that as per the Federation of Publishers’ & Booksellers’ Association in India (FPBAI), there are around 4000 registered booksellers, publishers, and subscription agents across India supplying books to institutions like universities, NITs, and IITs. These suppliers show their books to faculty members who then recommend the supply orders.

As per the Informant, there are only requirements of having a Permanent Account No. (PAN), filing Income Tax Returns (ITR), and prior experience in supplying books to libraries to enter the said business.

The Informant claimed that the introduction of restrictive conditions for procuring books by some institutions favors a few suppliers and excludes many others, reducing competition and limiting book choices for faculty and students. Such conditions include charges like earnest money deposit (EMD), security deposit, minimum annual turnover, annual renewal fees, processing fees for expressing interest, performance security, bank guarantees, and documentary proof of Goods and Service Tax (GST), profit & loss account, balance sheets, and import/export licenses.

Moreover, the practice of using tenders for procuring books is inappropriate since some universities have a large number of suppliers while others have only a few. The Informant submitted that these restrictive conditions in tender documents create an oligopolistic or monopolistic market situation, which goes against the principles of healthy competition.

The Informant mentioned that the FPBAI has brought up these concerns with the Vice Chancellors of various universities. Some universities have relaxed the conditions, but many have not. Additionally, some universities have advertised tenders only on specific platforms, excluding others, which further narrows competition and benefits only a select group of suppliers.

Observations of the Commission:

The CCI closed the case and determined that no contravention of provisions under Section 3 or 4 of the Act is evident. It observed that the Informant did not specify any specific actions of the Opposite Parties apart from alleging a violation of Section 3 of the Act, which could be examined under the provisions of that section. Similarly, while the Informant accused the Opposite Parties under Section 4 of the Act, it did not define a relevant market or establish the dominance of any Opposite Party. Thus, CCI remarked that it is not necessary to determine the relevant market or assess the dominance of the Opposite Parties.

The Commission noted that there are numerous institutional buyers procuring books for libraries such as government departments, judicial bodies, public libraries, public sector undertakings, professional bodies, and private institutions that also engage in book procurement. In such a market structure, the Informant appears to have the potential to supply books to various other institutions and organizations, indicating that its business survival does not seem to rely solely on the Opposite Parties.

The CCI also held that it has consistently upheld that a procurer, functioning as a consumer, has the right to make choices that serve its best interests. A procurer can specify particular technical criteria, conditions, or provisions within tender documents based on its specific needs. It is essential to recognize that the entity initiating the tender process is considered a consumer and has the authority to establish qualifying prerequisites according to its requirements.

The CCI, in conclusion, referred to a previous decision of Mr. Dushyant v. National Accreditation Board for Testing and Calibration Laboratories (NABL) & Ors., highlighting the importance of allowing consumers/procurers the freedom to exercise their choice in procuring goods/services. The decision emphasized that while the Opposite parties can set procurement standards, this practice cannot be deemed inherently anti-competitive. Factors such as the nature of the procurement, the size of the procurer, the goods/services being procured, and the potential impact on other sellers in the market need to be considered. If the procurer is a dominant buyer in its market and its unilateral actions in the buying process distort competition on the supply side, caution is warranted.

Case Title: XYZ (Confidential) vs. H.N.B. Garhwal University and Others

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