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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".

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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.

RIL’s KG-D6 has 80% less reserves than estimated, says Niko

According to RIL’s junior partner Niko Resources, proved plus probable reserves at the KG D6 block has decreased to 1.93 trillion cubic feet (tcf) from about 9.65 tcf previous estimate

New Delhi: Reliance Industries' waning KG-D6 gas block holds 80% less reserves than previously estimated, reports PTI quoting the firm's junior partner Niko Resources of Canada.

Proved plus probable reserves at Krishna Godavari basin D6 block has decreased to 1.93 trillion cubic feet (tcf) from about 9.65 tcf previous estimate, Niko said in a statement here.

Niko holds 10% stake in KG-DWN-98/3 or KG-D6 block where RIL is the operator with 60% interest. The remaining 30% is held by BP plc of UK.

In its "Reserves and Contingent Resources Update", the Canadian oil and gas producer said total proved plus probable natural gas reserves in its various blocks have fallen almost 51% to 377 billion cubic feet equivalent (bcfe) mainly due to lower reserves in KG-D6.

"The reason for the decline in reserves referred to above relates to the D6 block. Proved plus probable reserves at D6 as at 31 March 2012 have reduced to 193 bcfe," it said.

The 7,645 sq km KG-D6 block has 19 oil and gas discoveries. Of these, production from the MA oil find began in September 2008 and from the Dhirubhai 1 and 3 gas discoveries in April 2009.

Natural gas output at KG-D6 fields has dipped to 31.33 million metric standard cubic meters per day (mmscmd) this month after hitting a peak of 61.5 mmscmd in June 2010. RIL had in 2006 stated that output would rise to 80 mmscmd by 2012-13.

Niko said the field performance at the D1-D3 fields during 2011 demonstrated "higher than expected pressure draw-downs".

"An assessment of reservoir performance concluded that, contrary to the previous geological model, the current D1-D3 producing wells did not appear to be receiving any contribution from outside the main channel areas," it said.

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