The Competition Commission of India (CCI) on Wednesday, Aug. 31, in two separate orders, fined 11 cement-manufacturing companies and the Cement Manufacturers' Association (CMA) a total of more than Rs. 6,700 crore on charges that they had resorted to cartelisation.
The order is expected to bring some cheer to the builder community, but the stocks of the companies that have been fined are bound to go down when the markets open for trading on Thursday. The order is also expected to impact prices of new homes, should the cement companies keep cement prices competitive and construction firms pass on the benefits of these lower cement prices to their buyers.
The CCI, in a statement, said on Wednesday that according to one of its orders the following 10 companies have been fined around Rs. 6,300 crore for cartelisation: ACC was fined Rs. 1,147.59 crore, ACL Rs. 1,163.91 crore, Binani Rs. 167.32 crore, Century Rs. 274.02 crore, India Cements Rs. 187.48 crore, JK Cements Rs. 128.54 crore, Lafarge Rs. 490.01 crore, Ramco Rs. 258.63 crore, UltraTech Rs. 1,175.49 crore and Jaiprakash Associates Limited Rs. 1,323.60 crore.
The statement said the CCI had also fined the CMA Rs. 73 lakh as part of this order. It had also imposed a penalty of Rs. 397.51 crore on Shree Cement Limited as per a separate order.
The CCI order comes in light of a complaint filed by the Builders Association of India under Section 19(1)(a) of the Competition Act, 2002. In it, the CCI noted that not only had the CMA and the cement companies violated the act, but also that the companies used the platform that the CMA provided to share details "relating to prices, capacity utilisation, production and dispatch" of cement, thus restricting "production and supplies in the market, contravening the provisions of Section 3(1) read with Section 3(3)(b) of the Act."
The order also said the CCI "found the cement companies to be acting in concert in fixing prices of cement" -- the very definition of cartelisation -- "in contravention of the provisions of Section 3(1) read with Section 3(3)(a) of the Act."
The competition watchdog has also ordered the CMA and the cement companies to "cease and desist" from taking part in "any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market." It has also asked the CMA to stop collecting wholesale and retail prices through cement companies that are members of it, or from other sources.
