The Competition Commission of India (CCI) has slapped 11 cement companies with a fine of Rs 6,304 crore for price cartelisation, the highest penalty ever imposed by the fledgling, but increasingly assertive, anti-trust regulator.
The eleven firms found guilty of price cartelisation include ACC, UltraTech Cement, Grasim Cement (now a part of Ultratech) Jaypee Cements, Lafarge India, JK Cements, India Cement, Madras Cement, Century Cement, Binani Cement and Ambuja Cements. Industry body Cement Manufacturers Association has also been fined."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" the CCI said.
The penalty is equivalent to half of the companies’ profits for 2009-10 and 2010-11. The companies have been asked to pay the fines within 90 days. The 258-page order came after an investigation it ordered after Builders Association of India (BAI) — a group of construction firms — accused cement companies of artificially keeping prices high squeezing realtors.
Cement companies denied cartel formation.
“We have not indulged in any cartelisation. We will approach the Competition Appellate Tribunal and challenge the order,” said OP Puranmalka, whole-time director, UltraTech and head of the group’s cement business.
The ruling came after market hours.
"While imposing penalty, the Commission has considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market," the CCI said. CCI found that “the cement companies have not utilised the available capacity so that there are reduced supplies in the market and they can raise prices in times of higher demand.”
Realty firms welcomed the CCI order.
“We welcome the order against unfair trade practices adopted by major cement manufacturers as the industry has been dictating prices by controlling supply unmindful of the adverse impact on infrastructure and housing,” Naredco, national body of real estate industry.