CCI by its order dated July 10, 2015 penalised four-public sector insurance companies- National Insurance Company Ltd., New India Assurance Co. Ltd., Oriental Insurance Co. Ltd., United India Insurance Co. Ltd. for cartelisation in bidding for tender dated November 18, 2009 for selecting insurance service provider for implementation of Rashtriya Swasthya Bima Yojna (RSBY) for the year 2010-11 in Kerala. Anonymous information filed in the CCI submitted evidence showing that the four PSUs agreed to sharing business in meeting attended by the officials of the PSUs. The Director General (DG) also found that United India won the tender-as envisaged in the agreement- and later on shared the business with the other three PSUs. Further the PSUs invoked the exit clause of the tender year after year. Such invocation would lead to re-tendering and the PSUs would bid again with inflated premiums in the subsequent tenders. OPs raised a preliminary plea that they are exempt from the section 3 of the Competition Act, 2002 (Act) as they form a ‘single economic entity’ with 100% shareholding vested in the Govt. of India, which controlled the management and affairs of the companies. However, the Commission noted that regulatory reforms have been introduced which envisage that the four insurance PSUs act independently of each other. The parties had also admitted before the DG that all decision relating to submission of bids were taken without any prior approval from the Ministry of Finance. Hence the Govt. did not exercise any control over the four PSUs, and hence they cannot be said to constitute a ‘single economic entity’.

The evidence clearly established that the representatives of the companies met one day prior t submission of bids and entered into an anti-competitive agreement to manipulate the tendering process for implementation of the RSBY schemes, where United India received 70% of the premium and shared the remaining 10% with the remaining three PSUs. The conduct amounts to bid-rigging in violation of section 3(3)(d) of the Act. A penalty of 2% of the average turnover of the last three financial years has been imposed on the four PSUs, amounting to a total of INR 671 crore.