CCI fines 11 cement firms, trade body Rs6,700 cr for cartelisation
01 September 2016
The Competition Commission of India (CCI) has imposed a penalty of more than Rs6,700 crore penalty on 11 cement companies for cartelisation. The companies affected are UltraTech, Binani, Ramco, Jaiprakash Associates, JK Cement, Lafarge, India Cements, ACL, ACC, Century, and Shree Cement, besides the Cement Manufacturers' Association (CMA).
The order issued by the anti-trust regulator held the companies and the CMA responsible for "acting in concert in fixing prices of cement".
The companies and the CMA shared details relating to prices, capacity utilisation, production and dispatch, which led to restricted production and supplies in the market hurting consumers and the Indian economy, the order said. Further, the CCI also found the cement companies to be acting in concert in fixing prices of cement.
A final order has been passed by CCI, pursuant to the directions issued by the Competition Appellate Tribunal (CAT) remanding the matter back, while setting aside the original order of the fair trade regulator, which had had also imposed fine on cement companies.
Penalties of Rs 1,147.59 crore on ACC, Rs1,163.91 crore on ACL, Rs167.32 crore on Binani, Rs274.02 crore on Century, Rs187.48 crore on India Cements, Rs128.54 crore on JK Cement, Rs490.01 crore on Lafarge, Rs258.63 crore on Ramco, Rs1,175.49 crore on UltraTech and Rs1,323.60 crore on Jaiprakash Associates were imposed by CCI. In addition, a penalty of Rs73 lakh was slapped on the CMA.
Penalising the companies, the CCI said the actions of the companies and the CMA are not only detrimental to the interests of consumers but also to the whole economy, as cement is a critical input in construction and infrastructure industry, and vital to economic development.
Through a separate order, the regulator has slapped Rs397.51 crore fine on Shree Cement for unfair businesses practices.
The CAT had, in late 2015, revoked CCI's order, imposing a combined penalty of Rs 6,316 crore on cement companies for allegedly forming a price cartel (See: Compat quashes CCI's Rs6,316-cr penalty on cement firms).
The tribunal quashed the commission's order after observing that Ashok Chawla, then CCI chairperson, was party to the order, despite not being present during hearings.
The tribunal also allowed the cement companies to withdraw the Rs630 crore deposited by them in compliance of its interim order. The interim order, in May 2013, had stayed the penalty but asked the companies to deposit 10 per cent of its pending disposal of their appeal.
In June 2012, the commission had fined ACC, Ambuja Cement, UltraTech Cement and Jaiprakash Associates a little over Rs1,000 crore each for forming a cartel. The other companies fined included Madras Cements, Century Cement, Binani Cement, Lafarge India, JK Cement, India Cements and Grasim Cements (now merged with UltraTech). The CMA was also a party in this case and it was fined a token amount.
Competition watchdog CCI said interactions between the trade body and the cement companies were not confined to promoting the interest of the industry.
"Such interactions have been found to have transgressed the limits in sharing of information and extended to discussions on cost, prices, production and capacities...," the CCI order said.
The case was filed by Builders Association of India against the cement companies and CMA alleging collusion to fix prices.