No violation of Competition Act if suppliers to Govt. are NABL accredited

Case Details: Mr. Dushyant v. National Accreditation Board for Testing and Calibration Laboratories (NABL) & others [2022] 135 taxmann.com 349 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson
  • Sangeeta Verma and Bhagwant Singh Bishnoi, Member

Facts of the Case

In the instant case, Mr. Dushyant (“Informant”) filed an application under section 19(1)(a) of the Competition Act, 2002 (Act) alleging contravention of the provisions of Sections 3 and 4 of the Act by the National Accreditation Board for Testing and Calibration Laboratories (“NABL”) and other Department of Government/ Government-affiliated bodies or Public Sector Undertakings (OPs).

The informant alleged that NABL entered into Exclusive Supply Agreements (ESA) with the other OPs where no other accreditation service other than that of NABL was allowed. The suggested bidders/ suppliers had to obtain accreditation services from NABL and its accredited laboratories only.

The informant contended that when there were other accreditation agencies existing as on date in India. The informant alleged that it violated the provisions of section 3 (4) of the Act.

The informant further submitted that it lead to the monopolisation of power in the hands of NABL and caused an appreciable adverse effect on competition and led to the denial of market access also. The informant contended that this is in violation of Sections 4(2)(a) and 4(2)(c) of the Act.

CCI Held

The Commission held that the informant failed to provide any evidence about NABL having an agreement/ arrangement with OPs in relation to some exclusive arrangement in favour of NABL. Thus, the Commission, prima facie, does not find a contravention of Section 3(4) of the Act by any of the OPs.

As far as the question of violation of section 4 of the Act was concerned commission held that the Informant failed to provide any data/ information to support his claim in respect of market share or dominance of each of the OPs.

The OPs seeking NABL’s accreditation (based on their policies/ guidelines/ rules of procurement/ some enactments governing their functioning), there was nothing to suggest that NABL had any role in framing the same.

Further OPs are free to stipulate standards for procurement, and the same cannot be held to be out-rightly anti-competitive. There was no hint to suggest that procurers other than OPs are also imposing similar conditions as the present OPs. Therefore the question of foreclosure of the market for other accreditation agencies doesn’t arise.

The Commission ordered that there was no prima facie case of contravention of any of the provisions of Section 3 and/or 4 of the Act was made out against the OPs for causing an investigation into the matter, and therefore, the matter was ordered to be closed forthwith.