The Competition Commission of India (CCI) has imposed a total fine of more than Rs 205 crore on seven cement companies for rigging the bid of a tender floated for the procurement of cement by the Haryana government in 2012.
Also read: JSW Cement, other investors to buy out stake in Shiva Cement
It may be noted that the CCI had in August last year fined 11 cement-manufacturing companies and the Cement Manufacturers' Association (CMA) — in two separate orders — a total of around Rs. 6,700 crore on charges of cartelisation, and CMA for facilitating it.
Heavy fines
This time, according to a Ministry of Corporate Affairs statement, the seven cement companies, "through their impugned conduct, have engaged in bid-rigging..., which eliminated and lessened competition and manipulated the bidding process in respect of the impugned tender." The case deals with "procurement of cement to be supplied to government departments, boards and corporations in the state of Haryana," according to the Union ministry's statement.
The Ministry statement further said: "Accordingly, penalty of Rs 18.44 crore, Rs 68.30 crore, Rs 38.02 crore, Rs 9.26 crore, Rs 29.84 crore, Rs 35.32 crore and Rs 6.55 crore has been imposed upon Shree Cement Limited, UltraTech Cement Limited, Jaiprakash Associates Limited, JK Cement Limited, Ambuja Cements Limited, ACC Limited and JK Lakshmi Cement Limited." The fine amount is 0.3 percent of the average annual turnover of the companies over the past three years.
How the cartelisation was uncovered
The Ministry of Corporate Affairs said in its statement: "The bid-rigging has been established from quoting of unusually higher rates in the impugned tender (than rates quoted in tenders of previous years), determining different basic prices for supply of cement at the same destination through reverse calculation, quoting of quantities in the impugned tender such that the total bid quantity almost equalled the total tendered quantity, quoting of rates for the districts in a manner that all cement companies acquired L1 status at some of the destination(s) etc."
It added: "The anti-competitive conduct was reaffirmed through SMS exchanged and calls made amongst the officials of the cement companies."
