Competition Commission Raps Seven Cement Firms For Trying To Rig Bids

The Competition Commission of India (CCI) has imposed an aggregate penalty of Rs 206 crore on seven cement companies for trying to rig bids for Haryana government contracts in August 2012.

The seven companies are Shree Cement Ltd., UltraTech Cement Ltd., Jaiprakash Associates Ltd., JK Cement Ltd., Ambuja Cements Ltd., ACC Ltd., and JK Lakshmi Cement Ltd.

The penalty on cement makers has been calculated at 0.3 percent of their average turnover over the last three financial years, the CCI order said.

They have been charged under Section 27(b) of the Competition Act, 2002 which deals with the penalties imposed in cases of abuse of dominant position or cartelisation.

The companies have to deposit the amount within 60 days.

In August 2012, the Haryana government had invited tenders for supplying four lakh million tonnes of cement. All the seven companies submitted bids.

The CCI order said the companies quoted higher than the rates set in August 2011 for substantially lower quantities of cement. The total tendered quantity was divided among the seven companies so that each bidder could get the contract, the CCI said.

The Commission asked the director general (DG) to probe the matter in January 2014. In a report submitted in December 2015, the DG concluded that the companies had colluded with each other to rig the bids of the now 'impugned tender'.

The DG found that the rates quoted by the companies for different categories of grey cement were 3.4-3.8 times higher than the prevailing prices based on the Wholesale Price Index.

The tender had to be cancelled, which forced the Haryana government to start the procurement process afresh, leading to cost overruns and a possible delay in the execution of public infrastructure projects.

The commission said the penalties reflect the seriousness of the infringement and should deter such acts in future.