Competition Regulator Imposes Rs 6,316.6 Crore Fine Against Ten Cement Firms For Cartelisation

The Competition Commission of India (CCI) has found 10 cement companies and their trade association i.e. Cement Manufacturers Association (CMA) guilty of cartelisation, it said in a press release. CCI said together the 10 cement companies have to pay Rs 6316.59 crore as penalty.

The CCI order was issued after a previous such order by the competition authority was challenged at the Competition Appellate Tribunal (COMPAT) and the COMPAT had remanded the matter back while setting aside the original original order.

In Wednesday’s order the CCI ruled that the cement companies used the platform provided by CMA and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market.

The CCI ruled that this was in contravention of the provisions of Section 3(1) read with Section 3(3)(b) of the Competition Act. Further, the CCI also found the cement companies to be acting in concert in fixing prices of cement in contravention of the provisions of Section 3(1) read with Section 3(3)(a) of the Act.

Accordingly, the regulator has imposed a Rs 1147.59 crore penalty on ACC Ltd., Rs 1,163.91 crore on Ambuja Cement Ltd., Rs 167.32 crore on Binani Cement, Rs 274.02 crore on Century Textiles and Industries Ltd., Rs 187.48 crore on India Cements, Rs 128.54 crore on JK Cement Ltd., Rs 490.01 crores on Lafarge India Ltd., Rs 258.63 crore on Ramco Cements Ltd, Rs 1,175.49 crore on UltraTech Cement Ltd. and Rs 1,323.60 crore on Jaiprakash Associates Ltd. In addition, a penalty of Rs 0.73 crore has also been imposed on CMA.

While imposing penalties, the Commission has noted the action of the cement companies and CMA as being not only detrimental to the interests of consumers but also as detrimental to the whole economy, as cement is a critical input in construction and infrastructure industry – and thus vital for the economic development of the country.

The cement companies and CMA have been directed by the regulator to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. CMA has been further directed to disengage and disassociate itself from collecting wholesale and retail prices through member cement companies or otherwise. Also, CMA has been restrained from collecting and circulating the details relating to production and dispatch by cement companies.

Cement companies can appeal against the final order in COMPAT in the next 30 days.

In 2012 the CCI had passed a similar order against the same 10 companies on grounds of cartelisation. The penalties levied then are the same as in Wednesday’s order. But that CCI order was challenged at the COMPAT on grounds that it was signed by all CCI members, even though one of them was not present in all the hearings. The COMPAT had then set aside the CCI order on the principle that only one who hears the matter can decide on it. It had asked CCI to hear the matter afresh.

Earlier CCI had issued a separate order against Shree Cement imposing a penalty of Rs. 397.51 crore.