Identical Pricing as an Indicator of Cartel Formation : A Case Study on Government Procurements in India

Cartel formation by suppliers in government procurements is a common occurrence. However, establishing the presence of cartel is not an easy exercise. The oft-cited indicium adopted for such determination is quotation of identical prices by the bidders. The paper explores the sufficiency and power of identical pricing as a tool for determination of cartel formation in the tendering process. For this purpose, an in-depth analysis is done of two cases related to procurement of materials by the Indian Railways which were brought before the Competition Commission of India. Both cases show striking similarities in facts, including quoting of identical prices by the competing bidders. Interestingly, the Competition Commission came to diametrically opposite conclusions on the issue of presence of cartels in these cases. The paper analyzes whether quoting of identical prices, as much as it seems important in identifying cartelization, is the ‘clinching factor’ in this determination. The analysis shows that the Competition Commission of India has adopted a more nuanced approach in this regard. The paper also identifies some learnings for public procurement professionals when dealing with cases of suspected cartel formation