The Competition Commission of India (CCI) has imposed more than Rs 6,700 crore penalty on 11 cement companies - UltraTech, Binani, Ramco, Jaiprakash Associates, JK Cement, Lafarge, India Cements, ACL, ACC, Century, Shree Cement, besides Cement Manufacturers’ Association (CMA) – for cartelisation.
The final order has been passed by CCI, pursuant to the directions issued by the Competition Appellate Tribunal (CAT) remanding the matter back, while setting aside the original order of the fair trade regulator, which had had also imposed fine on cement companies.
The CCI said that the cement companies used the platform provided by the CMA and shared details relating to prices, capacity utilisation, production and dispatch, thereby restricting production and supplies in the market. Further, the CCI also found the cement companies to be acting in concert in fixing prices of cement.
Penalties of Rs 1,147.59 crore on ACC, Rs 1,163.91 crore on ACL, Rs 167.32 crore on Binani, Rs 274.02 crore on Century, Rs 187.48 crore on India Cements, Rs 128.54 crore on JK Cement, Rs 490.01 crore on Lafarge, Rs 258.63 crore on Ramco, Rs 1,175.49 crore on UltraTech and Rs 1,323.60 crore on Jaiprakash Associates were imposed by CCI. In addition, a penalty of Rs 73 lakh was slapped on the CMA.
Penalising the companies, the 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 to economic development.
Through a separate order, the regulator has slapped Rs 397.51 crore fine on Shree Cement, for unfair businesses practices.
The CAT had, in late 2015, revoked CCI’s order, imposing a combined penalty of Rs 6,316 crore on cement companies for allegedly forming a price cartel.
The tribunal quashed the commission’s order after observing that Ashok Chawla, then CCI chairperson, was party to the order, despite not being present during hearings. The tribunal also allowed the cement companies to withdraw the Rs 630-crore deposited by them in compliance of its interim order. The interim order, in May 2013, had stayed the penalty but asked the companies to deposit 10 per cent of its pending disposal of their appeal.
In June 2012, the commission had fined ACC, Ambuja Cement, UltraTech Cement and Jaiprakash Associates a little over Rs 1,000 crore each for forming a cartel. The other companies fined included Madras Cements, Century Cement, Binani Cement, Lafarge India, JK Cement, India Cements and Grasim Cements (now merged with UltraTech). The CMA was also a party in this case and it was fined a token amount.
CEMENTING THE TRUTH
Cartelisation penalty on cement companies
- CMA: Rs 73 lakh
- JK Cement: Rs 128.54 crore
- Binani: Rs 167.32 crore
- India Cements: Rs 187.48 crore
- Ramco: Rs 258.63 crore
- Century: Rs 274.02 crore
- Shree Cement: Rs 397.51 crore
- Lafarge: Rs 490.01 crore
- ACC: Rs 1,147.59 crore
- ACL: Rs 1,163.91 crore
- UltraTech: Rs 1,175.49 crore
- Jaiprakash Associates: Rs 1,323.60 crore