New Delhi, June 21: The Competition Commission of India (CCI) has slapped a Rs 6,307-crore fine on 11 cement companies for price-fixing, in the largest-ever penalty ordered by the regulator.
The CCI said the companies colluded to push prices higher by underutilising their plants and creating an artificial shortage.
UltraTech Cement, part of the diversified Aditya Birla Group, Holcim-controlled ACC and Ambuja Cement, India Cements and the Indian unit of France’s Lafarge SA were among those fined the equivalent of 50 per cent of their net profit for the financial years ended in March 2010 and March 2011.
The other companies found guilty are Grasim Cements (now part of UltraTech Cements), Jaypee Cements, JK Cement, Madras Cements, Century Cements and Binani Cements. The Cement Manufacturers’ Association (CMA) has also been fined.
“The act of these cement companies in limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy,” the CCI said in a statement.
The ruling, expected for several months, came after trading hours. The companies have been ordered to pay the fine within 90 days.
The CCI passed the order following a probe by the director-general of investigation on a complaint filed by the Builders’ Association of India.
The CCI, which is the equivalent of the European Commission or the US Federal Trade Commission, is headed by Ashok Chawla, a former finance secretary.
The cement companies have, however, denied any cartelisation saying the prices were determined by demand and supply.
The Cement Manufacturers’ Association (CMA) said it would go through the order and decide on the future course of action. The Builders Association of India (BAI), on whose complaint the CCI began the investigation, welcomed the decision.
When contacted, UltraTech said it was yet to receive the order. According to sources, Jaypee Associates has been hit the hardest as it would have to cough up as much as Rs 1,323.6 crore.
According to the CCI order, ACC will have to shell out Rs 1,147.59 crore, Ambuja Cement Rs 1,163.9 crore and Ultratech Cement Rs 1,175.4 crore as penalty. The penalties of UltraTech and Grasim have been clubbed in the order as they are now part of the same group.
Analysts said the companies were likely to challenge the order before the Competition Appellate Tribunal.