The Competition Commission of India (CCI) order penalized 11 cement companies with a fine of Rs.6000 crore for forming a cartel and profiteering and for causing a loss to economy and consumers. Government also gave a statement saying that the CCI said the companies colluded to underuse their plant and create an artificial shortage of cement.
Major cement firms like Aditya Birla Group, ACC , Ambuja Cements , UltraTech were among others fined and which dominate a third of the cement market. The companies have been fined 50 per cent of their turnover for 2009-10 and 2010-11. The cement manufacturers were asked to deposit the penalty amount within 90 days. They were 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.
Executives from the fined companies have denied price fixing. ACC said "We are aggrieved by this order and will appeal against it before the Competition Appellate Tribunal," stated the company in a statement. UltraTech will have to fork out Rs 1,175 crore and India Cements Rs 187.4 crore. These companies too will follow suit and take action after studying the order.
The CCI passed the order after a probe was conducted by the Director General of Investigations on a complaint filed by the Builders Association of India. The case goes back to 2007-08 when realtors' body Builders Association of India (BAI) had alleged that the retail prices fixed by 11 members of cement manufacturers association (CMA) were almost similar. The investigation was first handed to the Serious Fraud Investigation Office (SFIO) and later to CCI.
A report says that the CCI order will have an adverse impact on cement companies as they will not be able to raise prices in the near term. However, costs have been relatively steady, so there is less pressure to do so near term, it stated further explaining that the key will be the ability of cement companies to hold on to prices as we have entered the traditionally low demand monsoon months.