Economy & Market
CCI imposes fine of Rs 6,300 crore on cement firms for cartelisation
The Competition Commission of India (CCI) has imposed a penalty of Rs 6,200 crore on 11 cement manufacturers for violating the provisions of the Competition Act, 2002, which deals with anti-competitive agreements, including cartels. The penalty sum of Rs 6,300 crore is imposed on the companies at 0.5 times their profit for 2009-10 and 2010-11.
The Commission has asked the 11 companies to deposit the penalty amount within 90 days. The order was passed pursuant to the investigation carried out by the Director-General upon information filed by Builders Association of India. The Commission has also imposed penalty on the Cement Manufacturers Association.
The cement manufacturers on whom the penalty has been imposed are: ACC, Ambuja Cements, UltraTech Cements, Grasim Cements now merged with UltraTech Cements, JK Cements, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements.
While imposing penalty, the Commission has considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market. The Commission has found that the cement companies have not utilised the available capacity so as to reduce supplies and raise prices in times of higher demand.
The Commission has also observed that the act of these cement companies 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.
The contravening cement manufacturers had been directed to deposit the penalty amount within 90 days. They have also been directed 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.
The CMA has been asked to disengage and disassociate itself from collecting wholesale and retail prices through the member cement companies and also from circulating the details on production and dispatches of cement companies to its members.
The Builders Association of India has requested the Commission to review the quantum of penalty and also conduct an enquiry on the losses incurred by contractors due to such profiteering by the cement makers. Further, it has asked CCI to consider reimbursing the losses to contractors.
It was on the complaint of 74-year-old Dhruvkumar Lallubhai Desai that the CCI imposed a penalty of Rs 6,300-crore on 10 cement producers. Dhruvkumar Lallubhai Desai, a trustee of the Builders' Association of India, compiled and submitted a 3,500-page application to the country's competition regulator in July 2010 that alleged cement producers were colluding to fix prices. BAI is an 81-year-old association whose members include L&T, HCC, Simplex Infra, DLF and Hiranandani Group-against cement producers.