CCI imposes Rs 671 crore penalty on four state-run insurance companies

The Competition Commission of India (CCI) has imposed a penalty of Rs 671 crore on four public sector insurance companies-National Insurance Co, New India Insurance Co, Oriental Insurance Co and United India insurance company for indulging in anti-competitive practices.

Companies would have to deposit the penalty amount within 60 days of receipt of this order.

The competition regulator these insurance companies guilty of rigging a tender floated by the Government of Kerala in 2009 for selecting insurance service provider for implementation of the ‘Rashtriya Swasthya Bima Yojna’.

CCI has imposed the highest penalty of Rs 250 crore on New India Assurance Company. United India Insurance Company faces Rs 156.62 crore penalty.

National Insurance Company would have to pay Rs 162.80 crore as penalty whereas Oriental Insurance Company would pay Rs 100.56 crore as fine for its involvement in anti-competitive practices.

“The Commission, after considering the entire material available on record, directed the Director General (‘DG’) to cause an investigation into the matter,” said a CCI order said.

The Competition regulator found that the public sector insurance companies formed a cartel to bag the contract. “Companies not only quoted higher insurance premium bids in response to the tenders issued for the years 2010-11, 2011-12 and 2012-13; but they also forced the Government of Kerala to issue fresh tenders every year despite the fact that the said tenders were issued for a period of three years,” the order said.

The case was taken up by the Commission suo moto pursuant to an anonymous information alleging cartelization by four public sector insurance companies in relation to a tender issued by the Government of Kerala for the implementation of RSBY and CHIS schemes.

Source: Economic Times

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