Supreme Court: CCI can Investigate Anti-Competition elements in tendering process of Lotteries

Ambika bhardwaj

Published On: January 20, 2022 at 18:37 IST

Supreme Court ruled on Wednesday that if there is an element of anti-competition in the tendering process of lotteries that would necessitate an investigation by the Competition Commission of India (CCI), it cannot be prevented on the grounds that the lottery business is ‘Res Extra Commercium.’

A Bench of Justices Sanjay Kishan Kaul and MM Sundresh held that while lotteries are regulated commodity and may even be Res Extra Commercium, that does not negate the fact that they are anti-competitive in the context of the lotteries business.

The Court was hearing a challenge to the Gauhati High Court Judgement that had stalled the CCI’s final Orders on a Complaint about cartelisation and bid rigging in the tender process for the appointment of selling agents and distributors for lotteries held in the state of Mizoram.

In the past, State of Mizoram had issued an Expression of Interest (EoI) seeking bids for the appointment of lottery distributors and selling agents for State lotteries governed by the Mizoram Lotteries (Regulation) Rules, 2011 (Regulation Rules), which were enacted under the Lotteries (Regulation) Act, 1998(Regulation Act).

The EoI stated that the Government of India has set a minimum rate of Rs 5 lakh per draw for bumper and Rs 10,000 per draw for others.

Five bids were obtained, four of which quoted the same amount of $10,000 and were chosen. The State had also requested that the successful bidders to provide a security and deposit amount.

According to the respondent, there was bid rigging and a collusive bidding process, which violated Section 3(1) read with Section 3(3) of the Competition Act and caused severe monetary damage to the State of Mizoram.

Prima Facie Evidence on cartelisation and bid rigging against the bidder companies was discovered by the CCI’s Director General (DG) but the DG dismissed the case against the State.

However, it was noted that the “bidding committee” permitted for bidding and it was a situation of collusive bidding.

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