CCI slaps over Rs167 cr penalties on 7 cement companies for bid-rigging

The Competition Commission of India (CCI) has imposed penalties totaling Rs167.71 crore on seven cement companies for bid rigging of a tender floated by the Director, Supplies & Disposals, Haryana for procurement of cement to be supplied to government departments/ boards/ corporations in 2012.

CCI has directed Shree Cement Limited to pay a penalty of Rs18.44 crore, UltraTech Cement Limited Rs68.30 crore, Jaiprakash Associates Limited,Rs38.02 crore, JK Cement Limited Rs9.26 crore, Ambuja Cements Limited Rs29.84 crore, ACC Limited Rs35.32 crore and JK Lakshmi Cement Limited Rs6.55 crore.

The penalty has been levied at the rate of 0.3 per cent of the average turnover of the cement companies of preceding three years, CCI stated.
CCI's order, issued on a reference filed by the Director, Supplies & Disposals, Haryana, has held that the cement companies engaged in bid-rigging, in contravention of the provisions of the Competition Act, which eliminated and lessened competition and manipulated the bidding process in respect of the impugned tender.

The bid-rigging has been established from quoting of unusually higher rates in the impugned tender (than rates quoted in tenders of previous years), determining different basic prices for supply of cement at the same destination through reverse calculation, quoting of quantities in the impugned tender such that the total bid quantity almost equalled the total tendered quantity, quoting of rates for the districts in a manner that all cement companies acquired L1 status at some of the destination(s) etc.

The anti-competitive conduct was re-affirmed through SMS exchanged and calls made amongst the officials of the cement companies, CCI noted.

While imposing penalties, the commission took note of potential delay, which would have occurred in the execution of public infrastructure projects due to cancellation of the impugned tender. At the same time, due consideration was given to factors such as peculiarity of the tender process which created uncertainty in procurement, total size of the impugned tender and competition compliance programmes put in place by some companies while determining the quantum of penalty.

The cement companies have been directed to cease and desist from indulging in the Acts / conduct which have been held to be in contravention of the provisions of the Act.