The Competition Commission of India (CCI) has imposed a significant penalty on HP India Sales Private Limited, the Indian subsidiary of the U.S.-based HP Inc. The penalty, amounting to ₹138.85 crore, addresses HP’s involvement in manipulating government e-marketplace (GeM) tenders for personal computing products and printer supplies.
In two separate rulings dated July 13, the CCI fined HP India ₹126.87 crore in relation to personal systems and ₹11.98 crore concerning printer supplies. Additional penalties were also levied against HP’s resellers and certain officials involved in the misconduct.
“The Commission is of the view that HP has engaged in dictating bid prices to resellers and manipulated reseller participation in GeM tenders by withholding Manufacturer’s Authorisation Forms (MAFs) to benefit itself,” the CCI stated. The orders were issued by CCI Chairperson Ravneet Kaur and members Anil Agrawal, Sweta Kakkad, and Deepak Anurag.
Investigation Details and Findings
The investigation, initiated following a lesser penalty application by HP India in 2020, revealed that HP and its resellers coordinated bids to protect “most valuable customer” accounts. This coordination was primarily uncovered in the personal systems case, which involved laptops, desktops, workstations, and related accessories. The Director General of CCI examined 60 tenders, of which 41 met the ₹1 crore threshold in the Delhi region, finding incriminating evidence in seven tenders.
HP was found to have controlled MAFs and transfer prices crucial for reseller participation. In some cases, HP directly competed in tenders while also dictating reseller prices, thereby boosting its chances of winning these contracts.
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Under Sections 3(3)(d) and 3(1) of the Competition Act, HP India, along with Delphi Infosolutions, Digitech Computers, Orbit Techsol, Hind Technocare, and Krishna Computer, was found guilty of bid rigging. Apart from HP’s substantial penalty, Orbit Techsol faced a ₹86.32 lakh fine, Digitech Computers ₹17.97 lakh, Delphi Infosolutions ₹9.52 lakh, Hind Technocare ₹6.72 lakh, and Krishna Computer ₹1.91 lakh.
Printer Supplies Case
The printer supplies case scrutinized 29 GeM tenders exceeding ₹20 lakh in the Delhi region. The CCI’s Director General relied on various evidence forms, including tender documents, emails, WhatsApp communications, recordings, and witness testimonies. The investigation evaluated two WhatsApp groups and a May 2019 meeting at HP’s Connaught Place office.
Evidence revealed cover bidding, price fixation, and customer allocation practices between 2017 and 2020. DD Enterprises received the highest penalty among resellers at ₹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.
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The CCI dismissed arguments for calculating penalties based solely on turnover from specific GeM tenders, opting instead to consider turnover across relevant product categories to ensure effective deterrence.
Penalty Reductions and Legal Representation
HP’s request for a 100% penalty reduction, based on its role in disclosing the cartel, was rejected due to its significant role in orchestrating the scheme. However, the CCI did grant some penalty reduction for HP’s admission of contravention and cooperation, though details were not disclosed. Former HP official Manoj Grover received a full penalty reduction in the supplies case.
All parties were ordered to cease these practices, pay the penalties within 60 days, and undergo competition compliance training. The combined penalties imposed in these two orders amounted to about ₹142.72 crore, with HP India facing the majority at ₹138.85 crore.
HP India was represented by advocates from Chandhiok & Mahajan, including Karan S Chandhiok, Modulika Bose, Uday Bali, Shourya Mitra, and Riddhika Dumane, along with HP India General Counsel Rajeev Nair and Legal Counsel Niyati Ojha. Other parties were represented by senior advocates and law firms, including Vaibhav Gaggar and Gopal Jain.
