CCI to cement cartel: Pay 50% of FY10, FY11 profits as fine

The Competition Commission of India (CCI) has slapped  around Rs 6,000 crore penalty on 11 cement companies for forming a cartel. The penalty accounts for 50% of their FY10 and FY11 profits. The period of investigation for the 11 companies ranges between May 20, 2009 and March 31, 2011. 

 The cement manufacturers upon whom the penalty has been imposed are ACC, Ambuja Cements Limited,, Grasim Cement now merged with Ultratech Cement, JK Cements, India Cement, Madras Cement, Century Cement, Binani Cement, Lafarge India and Jaypee Cements.

 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 also 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 Commission has also observed that the act of these cement companies in limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy since cement is a crucial input in construction and infrastructure industry vital for economic development of the country.

 The contravening cement manufacturers had been directed to deposit the penalty amount within 90 days.  They have also been 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.

Also, the cement manufacturers' association (CMA) has been asked to disengage and disassociate itself from collecting wholesale and retail prices through the member cement companies and also from circulating the details on production and dispatches of cement companies to its members.

It may be recalled that last year, the Builders Association of India had moved the CCI alleging the cement manufacturers of having formed a price cartel. The CMA had denied the charges.

India is the second biggest producer of cement after China with more than 50 companies operating around 125 large plants.

Read the entire CCI order in the attached document.

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