Four state-owned general insurers are likely to move Competition Appellate Tribunal soon to defy Rs671-crore penalty charge against them for cartelisation and rigging, slapped by watchdog Competition Commission of India (CCI).Recently, the CCI had imposed a penalty of Rs671 crore on four public sector insurance companies - National Insurance Co, New India Insurance Co, Oriental Insurance Company and United India Insurance Company - for indulging in anti-competitive practices like cartelisation and rigging.
“The general insurers are in consultation with their respective legal departments and they will soon prepare the draft and will appeal it before Competition Appellate Tribunal to challenge the CCI order,” sources involving in the development told The Pioneer on Friday.The Competition Appellate Tribunal is a statutory body established under the provisions of the Competition Act, 2002 to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India.
As per the CCI order, the four insurers were asked to collectively pay over Rs671-crore penalty for alleged cartelisation and rigging the price bids for the Rashtriya Swasthya Bima Yojna (RSBY) scheme of the Kerala Government. The insurers would have to deposit the penalty amount within 60 days of receipt of this order, the order had said.
Asked if the tribunal upholds the CCI order, sources said, “If the tribunal bench passes the order in favour of the CCI, they will again appeal the case in the Supreme Court.”The CCI has imposed the highest penalty of Rs251.07 crore on New India Assurance, while National Insurance Company will have to pay Rs162.80 crore, Oriental Insurance Company Rs100.56 crore and United India Insurance Rs156.62 crore.
Sources said that just after getting the CCI’s penalty order, these four general insurers were looking at some legal option to challenge it, and now they have decided to appeal the case in the right forum, ie; Competition Appellate Tribunal.General Insurance (Public Sector) Association Chairman G Srinivasan recently told a news agency that they were examining legal remedies and would approach appropriate forum on the issue.
The General Insurance (Public Sector) Association is the umbrella body of all the four state-owned non-life insurers and G Srinivasan is also the Chairman and Managing Director of New India Assurance.The CCI letter had alleged that these four insurance firms had rigged the tender floated by Kerala on November 18, 2009 for selecting an insurance service provider for rolling out RSBY in 2010-11.
However, a senior official of National Insurance said, “We are surprised by the CCI order. I think there is something wrong with the order and the penalty is baseless, because we don’t make any money on any of the government-run schemes. The question of cartelisation arises only when there was some profit involved in it.”