Companies to contest order on cartelisation

The Competition Commission of India (CCI) has levied a penalty of over Rs 6,300 crore on 11 cement companies for price cartelisation.

These companies have to pay 50 per cent of their profit for the fiscal years ended 2010 and 2011 within 90 days. However, almost all the companies plan to contest the order. The industry body Cement Manufacturers Association has also been fined Rs 73 lakh for providing the platform for cartelisation.

Mr O. P. Puranmalka, Whole-Time Director, UltraTech Cement, said the company has not indulged in cartelisation and will move the Competition Appellate Authority against the order.

Mr Vinod Juneja, Managing Director, Binani Cement, said the company will explore all the legal options available to contest the ruling.

It is a major setback for the industry when it is fighting to overcome slowing demand and excess production capacity build-up, he said.

IMPACT

Holcim Group’s ACC and Ambuja Cement together have to pay Rs 2,312 crore while UltraTech Cement and Lafarge India may shell out Rs 1,175 crore and Rs 480 crore.

JP Associate and Century Textile and Industry may have to pay Rs 1,324 crore and Rs 274 crore as CCI has considered their entire profit earned from other business interest also. Madras Cements may have to pay Rs 259 crore, Binani Cements Rs 167 crore, India Cements Rs 187 crore and JK Cement Rs 129 crore.

Mr Lalit Kumar Jain, President, Confederation of Real Estate Developers’ Associations of India, said: “We have said that the steel and cement companies are forming cartels and artificially hiking the prices. The CCI judgement will now discourage cement makers from forming a cartel”.

Ms Sonam Mathur of Dhall Law Chambers said the cement industry has been the target of competition authorities worldwide. In India, there is little guidance on how the quantum of penalties should be determined in cartelisation cases, she said.

CCI OBSERVATIONS

The CCI passed the order following a probe by the Director General of Investigation on a complaint filed by Builders Association of India. Cement companies have been under scrutiny since past one year.

CCI felt the cement firms’ act of controlling supplies and determining prices was not only detrimental to consumers but also to the economy since cement is a crucial input in construction. India is the second biggest producer of cement after China with a capacity of 310 million tonnes.

suresh@thehindu.co.in

bindu.menon@thehindu.co.in

(This article was published on June 21, 2012)
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