Competition Tribunal Asks Cement Firms to Pay Rs 630-cr Interim Penalty

Firms are to make this payment within a month, failing which their petition would be dismissed

NEW DELHI: It has reported that Cement manufacturers and their industry body have been directed, as an interim step, to pay a tenth of the Rs 6,307 crore penalty imposed on them last year for anti-competitive practices.

The penalty was imposed on 11 cement majors and the Cement Manufacturers Association (CMA) by the Competition Commission of India (CCI) in June 2012. It found them guilty of forming cartels and manipulating prices in the market.

They appealed to the Competition Appellate Tribunal (Compat), which passed today’s part-payment order. They are to make this payment within a  month. If they do not, their petition would be dismissed. The final hearing on their argument would take place in August.

The competition watchdog had investigated 39 cement companies, on  a complaint by the Builders Association of India (BAI). It penalised major producers such as Grasim Cements (now merged with UltraTech), Lafarge India, JK Cement, India Cements, Madras Cements, Century Cements and Binani Cements.

“They…have institutionalised the system of sharing the prices, capacities and production among each other, using the platform of CMA in order to limit and production and supplies, and determine the prices of cement in the market,” the CCI order had said.

It said such controlling of supplies and manipulating prices through an anti-competitive agreement was not only detrimental to the cause of  consumers but to the whole economy. The fine was calculated as 50 per cent of the average profit for financial years 2010 and 2011 of these companies, the period for which they were investigated. The order was passed following a probe by the CCI’s director-general (investigation). All six members and chairman Ashok Chawla in a 258-page order were unanimous.

FIRMS UNDER SCRUTINY
ACC Ltd
Ambuja Cements Ltd
Binani Cement
Century Cement
India Cement
Jaypee Cements
JK Cements
Lafarge India
Madras Cement
UltraTech Cement (now incorporates 11th company, Grasim Cement)

(Business Standard)