11 cement firms fined over Rs 6,000 crore

The Competition Commission of India (CCI) on Thursday imposed a penalty of over Rs 6,000 crore on 11 cement manufacturing companies for violating the provisions of the Competition Act of 2002 that deals with anti-competitive agreements, including cartelisation.

The cement manufacturers that were penalised were ACC, Ambuja Cements Limited, Ultratech Cements, Grasim Cements now merged with Ultratech Cements, JK Cements, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements.

The CCI passed the order after a probe was conducted by the Director General of Investigations on a complaint filed by the Builders Association of India.

The penalty was equivalent to 50 per cent of their (the cement companies) profit for 2009-10 and 2011, a government statement said. The commission also imposed penalty on the Cement Manufacturers Association.

The cement manufacturers were asked to deposit the penalty amount within 90 days.  They were directed 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.

“We have not received the order as yet. We will react when we receive the order,” a spokesperson of Jaypee Cement said.

“While imposing penalty, the commission has considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market. The commission has found that the cement companies have not utilised the available capacity so as to reduce supplies and raise prices in times of higher demand,” the government statement said.

The commission also observed that the cement companies formed a cartel in limiting and controlling the supplies in the market and determined the price of cement through an anti-competitive agreement which was detrimental not only for the cause of the consumers,  but also to the economy.

India Cements said that it was “extremely disappointed by the order passed by the Commission. There was no basis to arrive at conclusions that our company has indulged in cartelisation and anti competitive practices”. The cement major said it would resort to legal recourse against the order.