In a Significant First, CCI Denies Full Immunity to First-in Leniency Applicant
Introduction
1. On July 13, 2026, the Competition Commission of India (“CCI”), by way of two separate orders, imposed an aggregate penalty of approx. INR 138.98 crore (approx. USD 14.63 million [1] ) on HP India Sales Private Limited (“HP India”), in addition to nominal penalties on HP India’s network of resellers, for bid-rigging in Government e-Marketplace (“GeM”) tenders concerning: (i) the sale and supply of personal system products, such as laptops, desktops, workstations and related offerings such as monitors and keyboards (“Systems Case”) [2] ; and (ii) supplies products, such as ink, toner cartridges, and other graphic and digital manufacturing supplies used with print hardware products (“Supplies Case”) [3]
2. Both proceedings arose from the same lesser penalty application filed by HP India (“LP Application”), with the Systems Case subsequently supplemented by further disclosures from a former HP India employee and a reseller, and the Supplies Case by further disclosures from the former HP India employee. The Systems Case concerned instances in which HP India and its resellers participated and competed in the same tenders, while the Supplies Case concerned HP India’s role in facilitating coordination amongst resellers in bidding and allocation of tenders, despite HP India itself not participating.
3. The CCI orders are significant as they clarify that: (i) an Original Equipment Manufacturer (“OEM”)-reseller relationship does not insulate an OEM from liability where it participates in the collusive tender or actively facilitates active coordination among competing resellers; and (ii) being the first lesser-penalty applicant does not necessarily secure complete immunity, particularly where the applicant played a central role in facilitating the cartel.
The Systems Case: When OEMs and Resellers become Competitors
4. Pursuant to the LP Application, the CCI initiated an investigation against HP India and 10 resellers for allegedly rigging 60 GeM tenders, valued at over INR 1 crore (approx. USD 0.11 million) each. The Director General, CCI (“DG”) examined 41 Delhi-based tenders in detail and found evidence of collusion in 7, where HP India: (i) restricted Manufacturer’s Authorisation Forms (“MAFs”); (ii) directed resellers pricing; and (iii) facilitated cover bids. In some tenders, HP India itself participated alongside its resellers while having access to their bid prices, giving it an advantage in the bidding process. As a result, HP India won 3 of the 7 collusive tenders.
An OEM and its resellers can become horizontal competitors when they participate in the same tender
5. The CCI found HP India and five resellers guilty of bid-rigging. It held that although HP India and its resellers ordinarily operated at different levels of the distribution chain, they became competitors when they participated as bidders in the same GeM tender. This is consistent with the CCI’s earlier approach in Delhi Jal Board v. Grasim Industries Ltd. [4] , where entities that submitted separate bids in the same tender were treated as independent competitors for the purposes of the bidding process, notwithstanding their common group affiliation. The underlying principle is that parties that present themselves as separate bidders in a procurement process must compete independently and cannot rely on their underlying commercial or organisational relationship to justify coordination. Notably, the CCI did not treat routine communications between HP India and its resellers as bid-rigging and found contravention only where the evidence established coordination in the bidding process.
6. Accordingly, the CCI imposed a penalty of approx. INR 127 crore (approx. USD 13.37 million) on HP India and penalties ranging from approx. INR 2 lakh (approx. USD 2,105) to approx. INR 90 lakh (approx. USD 0.09 million) on each of the five contravening resellers.
The Supplies Case: HP India as the ‘Kingpin’
7. The second investigation concerned HP India and 16 resellers for alleged bid-rigging in 29 GeM tenders valued at over INR 20 lakh (approx. USD 0.02 million) each, floated for the Delhi region. Unlike the Systems Case, HP India did not participate in these tenders. Instead, the DG found evidence that HP India acted as a central facilitator, coordinating the resellers’ bids and directing the allocation of tenders among them. The evidence indicated bid-rigging through cover bidding, price fixation and customer allocation during 2017–2020.
8. The CCI concluded that HP India and its resellers had operated a coordinated bid-rigging arrangement to preserve the pre-GeM allocation of Government customers (“MVC accounts”) among incumbent resellers, even after Government procurement moved to competitive e-tendering through GeM. [5]
9. According to the CCI, HP India and the resellers sought to replicate the old allocation system through coordination in GeM tenders. The evidence, inter alia, showed that HP India: (i) continued to recognise particular Government departments as the MVC accounts of particular resellers; (ii) used MAFs to control which resellers could participate in particular tenders; and (iii) coordinated the allocation of bids among the resellers, effectively determining which reseller would secure the relevant tender. Given its role in facilitating the arrangement, the CCI characterised HP India as the ‘kingpin’ and central facilitator of the cartel.
Independent application of Section 3(1) of the Competition Act
10. The parties’ argued that the alleged conduct could not be examined under Section 3(3) of the Competition Act, 2002 (“Competition Act”) because HP India and its resellers were in a vertical relationship and therefore did not constitute competitors. The CCI rejected this argument and held that the coordination among the resellers could be examined under Section 3(3) of the Competition Act, as the resellers were competitors and had directly coordinated through e-mails and WhatsApp groups to seek and provide support bids. Separately, the CCI held that HP India’s role as a facilitator could also be examined under Section 3(1) of the Competition Act, give that Section 3(1) of the Competition Act has independent application, with Sections 3(3) and 3(4) of the Competition Act constituting specific categories of conduct falling within its broader prohibition. Accordingly, the CCI examined the collusive arrangement involving HP India and the resellers without retrospectively applying the statutory hub-and-spoke framework, introduced by the Competition (Amendment) Act, 2023 (“2023 Amendment”).
11. Accordingly, the CCI imposed a penalty of approx. INR 11.98 crore (approx. USD 1.26 million) on HP India and penalties ranging from approx. INR 50,000 (approx. USD 526) to approx. INR 80 lakh (approx. USD 0.08 million) on each of the 16 contravening resellers.
Concluding Remarks
12. First-in leniency does not guarantee full immunity: Notably, despite being the first party to disclose the cartel and provide full and true disclosures, HP India did note receive a 100% reduction in penalty in either case. While the CCI recognised HP India’s admissions, cooperation and contribution to uncovering the conduct, it placed significant weight on HP India’s central role in devising, facilitating and benefiting from the arrangements. These CCI orders therefore appear to recalibrate the CCI’s approach to leniency as for the first time, the CCI declined to treat first-in leniency as synonymous with full immunity. While the lesser-penalty regime is intended to incentivise cartel participants to come forward and assist the CCI in uncovering otherwise difficult-to-detect cartels, these orders demonstrate that the CCI will make a holistic assessment and evaluate the benefit of cooperation extended by the applicant to the CCI against its role in the cartel. Pertinently, first-in status may secure a reduction in penalty, but not necessarily a clean slate.
13. Increasing scrutiny of hub-and-spoke coordination: These orders also clarify that the characterisation of an OEM-reseller relationship cannot be assessed solely by reference to the parties’ position in the supply chain. Where an OEM and its resellers compete for the same tender, the CCI may treat them as competitors for assessing potential cartel violation. Additionally, an OEM that facilitates coordination among competing resellers may attract liability for the resulting collusive conduct, even where it does not itself compete horizontally with the participants. Interestingly, the CCI also affirmed the independent application of Section 3(1) of the Competition Act, which enabled it to examine such coordination without retrospectively applying the statutory hub-and-spoke framework introduced by the 2023 Amendment. With the 2023 Amendment now expressly codifying hub-and-spoke arrangements, businesses that may find themselves in the position of a ‘hub’, such as manufacturers, distributors and digital platforms, will need to exercise greater caution in managing their relationships with vertically related business partners. In particular, they should have appropriate safeguards in place to ensure that their vertically related business partners do not engage in coordinated conduct and that the hub does not inadvertently facilitate or become complicit in such conduct.
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