Competition watchdog imposes Rs 6,715 cr fine on 11 cement cos
Competition Commission on Wednesday imposed more than Rs 6,700 crore penalty on 11 cement companies, including ACC and Binani, for cartelisation. Apart from penalising the Cement Manufacturers Association (CMA), the fair trade regulator has directed all the entities 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.
In a release, Competition Commission of India (CCI) said Rs 6,715-crore penalty has been imposed on 11 cement companies and the CMA. The latest order has been passed by the watchdog following directions issued by the Competition Appellate Tribunal (Compat), which had remanded the matter involving the cement companies to CCI for passing fresh order. The tribunal had also set aside fine on the 10 cement firms imposed earlier. A fine of Rs 1,147.59 crore has been imposed on ACC, while penalties on Jaiprakash Associates Ltd and Ultratech are Rs 1,323.60 crore and Rs 1,175.49 crore, respectively.
The fines on other companies are Rs 274.02 crore (Century), Rs 187.48 crore (India Cements), Rs 128.54 crore (J K Cements), Rs 490.01 crore (Lafarge), Rs 258.63 crore (Ramco), ACL (Rs 1,163.91 crore) and Binani (Rs 167.32 crore), according to the release.
CMA faces a fine of Rs 0.73 crore. Penalising the companies, CCI said the actions of the companies and the CMA are not only detrimental to the interests of consumers, but also to the whole economy as cement is a critical input in construction and infrastructure industry and vital for the economic development.
Through a separate order, the regulator has slapped Rs 397.51 crore fine on Shree Cement Ltd, for unfair businesses practices. According to CCI, the cement companies used the CMA platform and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market.
It was also found that the companies were acting in "concert in fixing prices of cement" which contravenes competition norms. Among others, CMA has been asked to disengage and disassociate itself from collecting wholesale and retail prices through member cement companies or otherwise.
The association has also been restrained from collecting and circulating the details relating to production and dispatch by cement companies. Highlighting the role of trade associations in promoting the interests of their members and the industry, CCI said cement companies were interacting using the platform made available by CMA.
"Such interactions have been found to have transgressed the limits in sharing of information and extended to discussions on cost, prices, production and capacities, thereby, facilitating the enterprises to determine prices and production in a concerted and collusive manner, than in a competitive manner," the release said.
Further, the watchdog cautioned that all those who participate in association activities, whether as a member or an executive or manager or employee, have to be sensitive to "the discussions not transgressing advertently or otherwise into anti-trust behaviour or practices".