Setback for cement cos as COMPAT lifts stay on CCI fine

The Competition Apellate Tribunal (COMPAT) on Friday directed the country's top 11 cement manufacturers to pay up 10 percent of the total fine imposed by the Competition Commission of India (CCI) in its June order of last year against these firms. The list of affected companies include Ambuja Cement, Binani Cement, JK Cement, Jaypee Associates and seven others apart from the lobbying firm Cement Manufacturer’s Association. In this interim order COMPAT also ruled that if the companies fail to deposit the expected amount, their pending pleas against the CCI's order would be rejected. CNBC-TV18’s Ronojoy Banerjee reports.

It is a conditional stay order granted by the COMPAT which means that their earlier stay order on the need for the cement companies to pay the cumulative fine of about Rs 6300 crore remains. However, as the COMPAT hears cases, the companies have now been directed to pay a token amount.
This is going to vary from company to company, cumulatively, this will come to Rs 630 crore, but it will vary from company to company depending on the amount of fine that was originally imposed by the CCI on each of these companies. For instance, in case of Jaiprakash Associates which faces the maximum brunt of the fine by the CCI, they will have to pay out in the range of about Rs 130 crore.
An interim order can only be challenged through a writ petition but according to the legal counsel of many of these companies, there is little taste for a battle with the government. Many companies are expected to pay, in fact, Ambuja Cements has agreed to pay about Rs 116.3 crore.
The next date of hearing is going to be in August. But not much of an impact on cement companies has been exemplified because the share prices did not react too much on this news as this is just a token amount.