CCI Dismisses Cartelisation Allegations in BESCOM Smart Meter Procurement: Case Closed Under Section 26(2)

Case Overview

Case Name: Mahesh N R Vs Bangalore Electricity Supply Company Limited
Forum: Competition Commission of India
Relevant Provision: Section 3 of the Competition Act, 2002
Disposal Provision: Section 26(2) of the Competition Act, 2002

The Competition Commission of India ("CCI" or "Commission") examined a complaint alleging bid rigging and collusive conduct in connection with a public procurement tender floated by Bangalore Electricity Supply Company Limited ("BESCOM"). The Commission, after reviewing all material placed before it, concluded that no prima facie case of contravention of Section 3 of the Competition Act, 2002 was established, and accordingly directed closure of the matter under Section 26(2) of the Act.

Background and Parties Involved

The Informant

The information was filed by Mahesh N R ("Informant"), who identified himself as a consumer under the jurisdiction of BESCOM (Opposite Party 1 / OP-1). His central grievance was that once smart meters were installed, he and other consumers would be compelled to bear AMI (Advance Metering Infrastructure) Service Provider charges of Rs. 75 per meter per month under what he characterised as a manipulated and inflated contract. He contended that this would result in consumers collectively paying several thousand crores more than warranted.

The Opposite Parties

  • OP-1 – Bangalore Electricity Supply Company Limited (BESCOM): A State instrumentality responsible for electricity distribution across Bengaluru Urban, Bengaluru Rural, Chikkaballapura, Chitradurga, Davanagere, Kolar, Ramanagara, and Tumakuru Districts in Karnataka.
  • OP-2 – M/s Rajashree Electrical Davangere: Originally established in 2009 as a proprietorship firm, it was reconstituted as a private limited company on 25.10.2023. The firm undertakes turnkey EPC (Engineering, Procurement and Construction) projects covering electrical distribution and transmission works, including cabling, metering, and substations, primarily for Karnataka Power Transmission Corporation (KPTCL).
  • OP-3 – M/s VR Patil Vividh Vidyuth Nirman: Incorporated in 2013 by VR Patil, this entity is also engaged in EPC businesses in Karnataka and additionally operates a 3-megawatt solar power plant.

Nature of the Tender in Dispute

The tender in question involved:

  1. Procurement of four lakh Smart Meters per year across OP-1's jurisdiction for a period of five years
  2. Selection of an AMI Service Provider across the State of Karnataka for a period of ten years

The Informant alleged that this procurement process was structured and manipulated to ensure that only OP-2 and OP-3 could qualify, effectively foreclosing competitive participation by other capable entities.

Allegations Raised by the Informant

The Informant built his case around four principal grounds, each of which was examined in detail by the Commission.

Ground 1: Deviation from the Mandatory Procurement Framework

The Informant alleged that OP-1, being a State instrumentality, was obligated to adhere to the Karnataka Transparency in Public Procurement Act, 1999 ("KTPP Act") and the Standard Tender Documents (Works Format-4) prescribed by the Government of Karnataka.

Specifically, it was alleged that:

  • Works Format-4, Clause 3.2(d) permits bidders to rely on the technical credentials and experience of their identified sub-contractors (including having a State Government License or having completed 50% of the tender value), but OP-1 explicitly disallowed such reliance in the impugned tender.
  • Paradoxically, for Smart Meter-related IT/Telecommunication experience, OP-1 allowed sub-contractor credentials — a selective inclusion allegedly designed to benefit OP-2 and OP-3, who lacked Smart Meter experience.

Ground 2: Arbitrary Technical Qualification Linked to Prior Execution in ESCOMs/DISCOMs

The Informant further alleged that the tender imposed a condition requiring bidders to have executed specific quantities of single-phase and three-phase meters within the last five financial years in ESCOMs or DISCOMs. Key contentions included: