The Competition Commission of India (CCI) late on Thursday announced a whopping $1bn fine on 11 major cement companies, by far the largest such penalty it has ever imposed (and nearly twice the amount previously reported)
The increasingly-aggressive watchdog ordered the companies, which include majors such as Ultratech, ACC, and Binani, to hand over half the profits made in the past two years, with an additional penalty on the industry body, the Cement Manufacturers Association. Cement stocks are bound to feel the effects when trading opens in Mumbai on Friday.
It said in a statement:
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 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 cement manufacturers association] 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.
Rajendra Chaudry, official spokesperson for the CCI told beyondbrics: “The significance of the decision lies in the fact that the commission is becoming stronger. With inflation where it is today, we can ensure that prices for consumers are based on healthy competition with actions like these, and the overall economic environment will improve.”
This article was authored by Kanupriya Kapoor and published in Financial Times. The full article can be accessed on Financial Times.
AnantLaw partners, Ms Anu Monga and Mr Rahul Goel have been representing Builders Association of India in the Cement Cartel case since initiation of investigation in 2009.