The Competition Commission of India (CCI) on Monday held tech giant HP India liable for orchestrating bid-rigging through its 16 authorised resellers in the Government e-Marketplace (GeM) tenders. The CCI found the firm guilty of cover bidding, price fixing, and dividing the tenders among themselves for supplying printer ink and toner cartridges between 2017 and 2020.
In two separate orders involving HP’s personal system products (such as laptops, desktops, notebooks, workstations) and printer consumables, the commission said HP India coordinated bids among its reseller network by selectively issuing Manufacturer Authorisation Forms (MAFs), which is a mandatory certificate required from the original manufacturer to bid on government tenders.
According to the CCI order, the collusion revolved around the transition to the GeM portal in 2017. Before GeM, these resellers had developed legacy commercial relationships with government departments, and such accounts were termed as “Most Valuable Customer” (MVC). When the new GeM portal introduced open competition, HP India’s resellers started losing their MVC account business to new rivals.
In its defence, HP India argued it was not the “kingpin” of the cartel, claiming it was forced into the arrangement because resellers threatened to shift to low-cost counterfeit products if the company refused to provide support. On the other hand, resellers argued that to maintain business and meet sales targets set by HP India, they had to coordinate pricing and discounts for specific tenders floated on the GeM portal.
“Transparency introduced by the GeM framework allowed these incumbent resellers to track other competing resellers who had previously not serviced the government customer accounts but were now competing for the GeM tenders issued by them. “This shift adversely impacted the commercial interests of these incumbent resellers,” the CCI said while imposing a penalty of Rs 126.87 crore on HP India.
To minimise their loss, certain resellers approached HP India to devise an arrangement that would enhance their chances of securing government supply contracts against other competing HP India resellers.
The CCI’s probe found that HP India issued MAF selectively to its resellers. It gave them only to preferred resellers or those who agreed to cooperate with them, effectively blocking genuine outside competitors from participating in the tenders.
To create the illusion of competition, the incumbent resellers routinely engaged in “cover bidding”. When an incumbent reseller who had previously serviced the tendering government entity wanted a specific contract, it would request HP India to arrange such “cover bids”. In some cases, the fellow resellers or sister companies were asked to submit intentionally higher or non-competitive bids. This ensured that the tender met the government’s minimum requirement of three participants without creating real competition.
“The Director General (DG) has also brought to light the aspect of use of sister entities by some resellers to meet the requirement of minimum participation. Such sister concerns have participated in order to give a façade of competition,” the order said.
During its investigation, the DG found communications between HP India and its resellers in addition to communications among resellers which showed that they were in direct contact with each other through emails and WhatsApp groups.
The CCI rejected both defenses. The regulator concluded that the transparent bidding process was deliberately manipulated, thereby depriving government departments of competitive market rates. The cases originated from HP India’s leniency application filed with CCI, with the company later admitting to the competition law violations and cooperating with the probe.
