CCI order: Cement prices rose after industry body meetings

The Competition Commission of India (CCI) has held the Cement Manufacturers’ Association guilty of being party to price collusion by the large players. CMA collects cement prices, both at the retail and wholesale level from all over the country.

These are the findings of the CCI report:

“When cement companies nominated by CMA are collecting prices of other competing cement companies over phone and e-mail, co-ordination on prices is easily facilitated.”

CMA’s argument is that the prices that are collected are historical and do not give rise to any competition concern. Also, it was collecting the prices for onward transmission to concerned authorities in the government.

But CCI counters those claims.

“Cement companies collecting prices of all others are the companies holding a major portion of the market. If the prices of all competing companies are collected on a regular and repeated basis, the dissemination of information and consequently co-ordination gets facilitated.”

A High Power Committee of the CMA holds regular meetings. And data gathered by the CCI during investigation, prices of leading cement companies increased immediately after meetings on two occasions.

“Where prices are being kept high over a period of time, it is not necessary that prices would increase after every meeting, and that prices had increased after two meetings raises suspicion of co-ordinated action among the Opposite Parties (big cement companies). More so in light of the fact that earlier also CMA was found to be engaged in restrictive trade practices by MRTP Commission.”

Also, CCI observes that while for wholesale prices to be supplied to the office of the Economic Adviser, the Department of Industrial Policy & Promotion has nominated cement companies, for retail prices, the representatives have been nominated by the CMA itself.

“Since CMA on its own is nominating the companies for collection of retail prices from different centres, there are clear possibilities and opportunities for co-ordination on prices. When competing cement companies are collecting prices from different centres of each other, there are enough occasions fro collusion among them on matters of price.”

Also, the CCI report said that while prices of cement companies were collected under the aegis of CMA, company wise and factory wise data regarding capacity, production, dispatches, exports were being furnished not only to the Ministry of Commerce and Industry, but also to cement companies.