Economy

Cement companies under lens for suspected cartel move

Divya Trivedi New Delhi | Updated on March 12, 2018 Published on August 16, 2011

A labourer unloading a cement bag at a wholesale outlet in Bangalore in this file photo.   -  Business Line





Jaypee Cement and Shree Cement are among 10 cement companies likely to be probed for suspected cartelisation.

Confirming that there were 10 names in the list presented to the Ministry of Corporate Affairs for cartelisation, a senior MCA official told Business Line, “We were told to look into the top three only; I don't know why the others were let off. But this does not give the others a clean chit. We may or may not look into them.”

SFIO probe

Earlier, the MCA had ordered the Serious Fraud Investigation Office to probe only the top three — ACC, Gujarat Ambuja and Ultratech Cements. SFIO, in its report submitted to the Ministry, reportedly recommended action against the three manufacturers for price manipulation.

The three companies control almost one-third of the country's total cement manufacturing capacity of 300 million tonnes.

Last year, the Builders Association of India had moved the Competition Commission of India alleging the cement manufacturers of having formed a price cartel.

The Cement Manufacturers' Association had denied the charges.

An industry insider, on conditions of anonymity said, “The charges against us have been withdrawn on technical grounds. It was simply being investigated. There were 12 to 15 companies under the scanner where 75 to 80 per cent of the nation's cement capacity is covered.”

Old Tale

Collusion to jack up prices is nothing new for the cement industry and it is widely believed that price fixing has been in practice since decontrol in 1989.

Simply put, cartelisation refers to companies colluding either actively or passively to fix prices which are artificially high.

While the first case of cartelisation came to light in 1991, in 2007 the Monopolies and Restrictive Trade Practices Commission (MRTPC) found that almost all manufacturers were guilty of cartelisation.

The MRTP Commission passed cease and desist orders, which unfortunately did not have any penal impact.

India is the second biggest producer of cement after China with more than 50 companies operating around 125 large plants.

Cement prices were hovering at Rs 450 on Tuesday in the Delhi region.

Published on August 16, 2011
null
This article is closed for comments.
Please Email the Editor