Cement cos can challenge CCI order at Compat: CCI

Continuing to stand by the order against cement companies, R Prasad, member, CCI said it is up to cement companies to challenge the CCI order at Compat. According to Prasad, the old MRTP case against cement companies is yet to be cleared.

Meanwhile, the probe on tyre companies is still underway, he said, with the order likely in the next 7-10 days. He mentioned that all major tyre companies attended the CCI hearing on cartelization. In his view, the penalty levied on tyre companies may be three times the profit earned. Prasad added that they have received complaints about auto companies limiting sale of spare parts. Q: What is the communication from the cement companies - will this issue go to the Compat, will they look at the Supreme Court after that? Will there be some kind of legal intervention? A: This order has been passed by the CCI. Now it is for the cement companies to challenge it before Compat. I don’t know how much time Compatwill take. Once it goes there, the CCI or the cement companies agree after Compat orders, they can go to the Supreme Court. As far as the responses for the cement company is concerned, we have nothing to do in the CCI. Q: There has been some talk in the market that you are about to pass another order against cement companies pertaining to a previous case where may be even fresh penalties involving other companies might also be involved. Can you clarify whether such a report is true? A: An old case is pending, which was transferred from MRTPC commission that has to be disposed off. It is under discussion in the commission. No finality has been reached till now. Q: There have been also talks that you have been examining tyre companies for a similar kind of abuse and you might follow it up with a report or even a penalty on many tyre companies for cartelization. Are these reports true, have you been examining tyre companies? A: Yes, we have been examining the tyre companies. The tyre companies had come for hearing, which is  over now. The matter is under discussion in the CCI and sooner or later some order will come out. But I don’t know myself what the order will be for the time being. Q: How soon will we hear about this because there were expectations that we could hear within the next week about the tyre manufacturers. Our indication seems to suggest it’s not as serious the case according to the CCI as they observed in the case of cement? A: It will take about a week to 10 days to finalize the issue. The complaint was against cartelization in the tyre industry. In the past too, in 1950’s, 60’s, 70’s, 80’s this issue of cartelization in the entire industry has always come up. It has been examined by different government bodies in those days as well. Since the CCI has come to effect from May 20, 2009, it takes another dimension. Q: The criticism leveled against the CCI was that data did not seem to be sufficient for the kind of observations and ruling that they made for cement. Even in the one past instance with DLF, things are still stuck in a litigation loop. Would you say that you think you have a much more concrete case at this point especially against some of the specific names that you have mentioned for the cement industry? A: Whatever is there is in the order. So now it is up to the Tribunal to decide whether it is sufficient or not. Now the CCI has no function to perform. The Competition Appellate Tribunal will decide. We can give our comments but it has no meaning. It is the Tribunal which will decide where the commission was right or wrong. Q: You had asked tyre companies to come and meet you, which specific companies were summoned to come and present their case from the tyre industry? A: Till the order comes out, it is not proper to give the names. But the major tyre companies had come for the hearing. The matter is in consideration of the commission. So in a week or 10 days, you will come to know. Q: Any other industries or sectors that the CCI is actively engaged in examining at this point because there has been names of some auto component manufacturers which have also been mentioned. Can you give us which sectors you are currently focused on? A: They are not auto component manufacturers. Most of the car companies what they do, if you have to get your car repaired you have to buy the auto parts from their authorized dealers or from them and now if you take any luxury car or high costing car, the auto parts which is supplied by the companies, they are very costly. If the auto parts are available in the market, they may not be so costly but those which were the entire supplies made through these car companies are very costly and the consumer suffers. So this issue had come up in earlier jurisdictions also and similar issue has come up in India also. So there have been complaints against car companies who do not allow the car owners to buy parts from the market otherwise the warranty would be lost. The car owners have no option but to go to the car company’s authorized dealers to buy the parts for repair of the cars. So this is the issue and that has to be decided. Q: Is this limited to some of the new players because the observation seems to be that for established faces like Maruti, Tata Motors have been working with the open market and there hasn’t really been this kind of cornering of supply parts in the past many years? A: In India earlier, there were only two car manufacturers, Fiat and Ambassador. Then Tata came in, and later Maruti. Now these car owners can access the parts from anywhere but the newer players are mostly multinational companies, they have not allowed this to happen. So let’s see how this works out. The matter is still under investigation. We have not received the report from the director general. Q: If indeed you find a party of them guilty of cartelization the modus of implementing any fine will be the same as the cement companies, it will be a proportion of their profits that you will penalize them with? A: Actually the penalty levied whether for abuse or dominance or for cartelization is under 27 B of the Competition Act. Now under 27 B of the Competition Act for cartel, there is a different proceeding and different way to treat them. Now what happens is when there is a general provision and there is a special provision, the special provision prevails over the general provision. So in the case of cartel, it will normally be on the profits earned during the period of cartelization. It will be maximum three times of that profit during the period of cartelization. So that will have to apply if the commission holds it is a cartel. Q: By when will the order on cement companies be out, the second cement order and is it likely to levy penalties on other cement companies? A: Unless the order is signed, I cannot tell you what will be the outcome of the order. It has to be signed only then we can tell you the outcome. But it should be out in a week or 10 days.