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Price cartelisation: 11 cement firms get Rs6,200 crore rap from CCI

In 2007, the MRTPC let off the cement companies with only a cease and desist order. This time the CCI has imposed a hefty penalty of Rs6,200 crore, equivalent to 50% of their profit for 2009-10 and 2010-11

New Delhi: The Competition Commission of India (CCI) today imposed a hefty penalty of about Rs6,200 crore on 11 leading cement companies including ACC, Ambuja Cements, UltraTech and Jaypee Cements for indulging in price cartelisation, reports PTI.

The other companies found guilty are Grasim Cements now merged with UltraTech Cements, Lafarge India, JK Cement, India Cements, Madras Cements, Century Cements and Binani Cements.

The industry body Cement Manufacturers Association (CMA) has also been fined.

The firms in violation of the competitive laws have been directed to deposit the penalty within 90 days.

"The Competition Commission of India has found cement manufacturers in violation of the provisions of the Competition Act, 2002 which deals with anti-competitive agreements including cartels." an official statement said.

The penalty is equivalent to 50% of their profit for 2009-10 and 2010-11, it added.

In an interview to a popular business TV channel, R Prasad, member of CCI said that the cement companies would have to cease and desist from cartelisation. He also warned that cement companies could face severe penalties, in case they were found guilty again.

The CCI passed the order following a probe by Director General of Investigation on complaint filed by Builders Association of India alleging that the cement manufacturers had formed a price cartel. However, the Cement Manufacturers' Association had denied the charges.

CCI felt that the act of these cement firms in "limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy since cement is a crucial input in construction and infrastructure industry vital for economic development of the country".

Earlier in 2007 the Monopolies and Restrictive Trade Practices Commission (MRTPC) found that almost all manufacturers were guilty of cartelisation. The Commission was, however, lenient and let them go with only a cease and desist order.  

"While imposing penalty, the Commission has considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market," the statement said.

The CCI found that the cement companies have not utilised the available capacity so that there are reduced supplies in the market and they can raise prices in times of higher demand.

CCI felt that the act of these cement firms in "limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy since cement is a crucial input in construction and infrastructure industry vital for economic development of the country".

User

COMMENTS

PPM

5 years ago

If the Govt allowed the builder to import cement, the problem will be solved.

R Balakrishnan

5 years ago

Looks like a very flimsy case. Impossible to prove anything. CCI is simply creating noise.

REPLY

GOVIND

In Reply to R Balakrishnan 5 years ago

Whether it is flimsy or sturdy, the CCI has done a great thing. It will have a deterrent effect for anymore cartelization in any area of mighty businesses in India.

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