CCI says cement cos guilty of cartelisation, to fine 10 cos

Cement companies have been under fire as the Competition Commission of India (CCI) started Investigations into alleged cement caterlisation over a year back. The CCI investigated allegations that cement companies’ decreased production to inflate prices. The watchdog looked into the supply shortage issue and found that cement companies were running far below than their plant capacity at around 70%, reports CNBC-TV18's Malvika Jain.

Now, the CCI has prepared its report against 39-40 cement companies in the cartelisation case. Also Read: CCI penalty may send guilty in frenzy of appeal: Trilegal
Till now of course, names of companies found to have colluded to push prices have been under wraps. However, the big three have been under constant speculation that is as ACC, Ambuja and Ultratech constitute 40% of India's cement capacity but no official word on them has been released.
Action might be taken by CCI but as per section 27 of the Competition Act. According to earlier reports penalties were expected to be to the tune of roughly 3% of company's  market caps. CCI also has the power to impose a penalty of up to 8% of average turnover of past three years .
However, in their defense cement companies say that until the entire industry is involved a cartel cannot be formed .
Cartels are arrangements between firms not to compete on price and product and are aimed at raising the price above the competitive levels. For consumers, cartelisation results in higher prices, poor quality and less or no choices of goods.
Companies say that price increases were undertaken only to offset higher input cost - freight rates, coal prices etc. It will also be significant to watch how price increases will be undertaken in the future post today's ruling.
Now, an unfavorable verdict is likely to hurt profit and pricing power of cement manufacturers. If a penalty is levied, the cement companies can approach the Competition Apellate Tribunal to appeal the penalty. Also watch the accompanying video.