CCI imposes ₹138.85 crore penalty on HP for manipulating government tenders

The Competition Commission of India (CCI) recently imposed penalties totalling ₹138.85 crore on HP India Sales Private Limited, the Indian sales entity of US technology company HP Inc, after finding that it manipulated government e-marketplace (GeM) tenders for personal computing products and printer supplies.

In two orders passed on July 13, the CCI fined HP India ₹126.87 crore in the personal systems case and ₹11.98 crore in the printer supplies case. Separate penalties were imposed on its resellers and officials.

“The Commission is of the view that HP has engaged in dictating bid prices to resellers, and manipulated participation of resellers in the GeM tenders by withholding MAFs in order to benefit itself,” CCI said.

The orders were passed by CCI chairperson Ravneet Kaur and members Anil Agrawal, Sweta Kakkad and Deepak Anurag.

Both proceedings arose from a lesser penalty application filed by HP India in 2020, following which the CCI directed its Director General (DG) to investigate Delhi-based tenders. Former HP official Manoj Grover and reseller Delphi Infosolutions sought lesser penalties.

The CCI found that HP and its resellers coordinated bids and arranged cover bids to protect “most valuable customer” or MVC accounts serviced by resellers before GeM introduced competitive bidding.

The personal systems case concerned laptops, desktops, workstations and accessories. The DG analysed 60 tenders, of which 41 met the threshold of ₹1 crore in the Delhi region. It found incriminating emails concerning seven tenders.

The CCI concluded that HP controlled Manufacturer’s Authorisation Forms (MAFs) and transfer prices required by resellers to participate. HP competed directly in some tenders while dictating prices to resellers, enhancing its prospects of winning.

It held HP India, Delphi Infosolutions, Digitech Computers, Orbit Techsol, Hind Technocare and Krishna Computer guilty of bid rigging under Sections 3(3)(d) and 3(1) of the Competition Act.

Apart from HP’s ₹126.87 crore penalty, Orbit Techsol was fined ₹86.32 lakh, Digitech Computers ₹17.97 lakh, Delphi Infosolutions ₹9.52 lakh, Hind Technocare ₹6.72 lakh and Krishna Computer ₹1.91 lakh. Officials were separately penalised.

The printer supplies case concerned ink and toner cartridges. The investigation covered 29 GeM tenders exceeding ₹20 lakh in the Delhi region.

The DG relied on tender documents, emails, WhatsApp chats, recordings and witness statements. Two WhatsApp groups and a May 2019 meeting at HP’s Connaught Place office were examined.

The CCI found evidence of cover bidding, price fixation and customer allocation between 2017 and 2020. HP and all 16 resellers named in the case were held to have contravened the Competition Act.

DD Enterprises received the highest reseller penalty of ₹77.26 lakh, followed by Kaypee Enterprises at ₹21.94 lakh, International Computer Resources at ₹17.94 lakh and Pioneer Technologies at ₹17.73 lakh.

The CCI rejected arguments that penalties should be calculated only on turnover from specific GeM tenders. It considered turnover from the relevant product category, saying a tender-specific calculation would undermine deterrence across multiple procurements.

HP sought a 100 per cent penalty reduction because it was the first to disclose the arrangements. The CCI refused the same due to HP's prominent role in devising and facilitating the cartel and its position as the key beneficiary.

“Complete reduction in penalty would defeat the objectives of the Act," CCI held

However, HP received a reduction for admitting the contravention, providing evidence and cooperating. The reduction was redacted. Grover received a 100 per cent reduction in the supplies case.

The parties were directed to cease the practices, pay the penalties within 60 days and conduct competition compliance training.

Taken together, the CCI imposed penalties of about ₹142.72 crore through the two orders.

HP India accounted for ₹138.85 crore, while the remaining ₹3.87 crore was imposed on its resellers and various officials.

The personal systems order carried aggregate penalties of about ₹128.33 crore, while penalties in the printer supplies case totalled about ₹14.38 crore.

HP India was represented in both cases by advocates Karan S Chandhiok, Modulika Bose, Uday Bali, Shourya Mitra and Riddhika Dumane from Chandhiok & Mahajan.

HP India General Counsel Rajeev Nair and Legal Counsel Niyati Ojha also appeared.

Thoughtsol Infotech was represented by Senior Advocate Vaibhav Gaggar with a team from King Stubb & Kasiva led by its partner Aniket Ghosh and comprising associate Sarthak Miglani.

Delphi solutions was represented by Advocate Arjun Krishnan along with Advocates Ankur Singh (Partner) Abhijeet Singh and Pritha Banerjee of Samvad Partners

In the personal systems case, Senior Advocate Gopal Jain appeared for Intensity Global Technologies and its official.

In the printer supplies case, Senior Advocate Vaibhav Gaggar represented DD Enterprises, Ascent Information Systems, Kaypee Enterprises, Britex Enterprises, Alankar Distributors, Vijay Stationery Mart, GR Enterprises, Perfect Innovative Computers, Khandelwal Traders, A Square Technologies, Innovative Solutions and Pioneer Technologies.

Senior Advocate Ashish Mohan appeared for Rahul Jindal, an official of HP India.

[Read personal systems judgment]

[Read printer supplies judgment]