New Delhi, Dec. 11 (PTI): The appellate authority for the Competition Commission of India has set aside a Rs 6,317-crore penalty imposed on 11 cement makers for allegedly forming a cartel, and asked the fair trade regulator to hear the charges again.

“The impugned order is set aside and the matter is remitted to the Commission for fresh adjudication of the issues relating to alleged violation of the relevant sections of the Competition Act,” the Competition Appellate Tribunal said Friday.

The CCI has to pass the fresh order within three months.

The CCI's penalty against cement manufacturers was one of the biggest imposed so far by it, and the tribunal's verdict may have repercussions for similar cases.

The tribunal also allowed the cement manufacturers to get back a total of Rs 631 crore that they had deposited with the CCI as part payment.

The tribunal said the commission should have a protocol and guidelines for conducting inquiries in consonance with the rules of natural justice.

The cement firms and the Cement Manufacturers Association had appealed to the Compat against the two CCI orders passed in June-July 2012, by which the regulator had imposed a cumulative penalty of Rs 6,317 crore on cartelisation charges.

The companies are ACC, Ambuja Cements, Binani Cements, Century Textiles Ltd, India Cements, JK Cements, Lafarge India, Madras Cements, Ultratech, JP Associates and Shree Cements.

The CCI had passed the two orders after an investigation into complaints, including those from the Builders Association of India, against alleged price cartelisation among cement firms.

The BAI and the CCI had made presentations before a Parliamentary Standing Committee about the allegation that cement makers had formed a cartel.

The BAI then filed a complaint with the CCI on July 26, 2010, alleging that CMA and 11 cement manufacturers had formed a cartel and were controlling production, causing an exorbitant increase in cement prices.

The CCI ordered an investigation, which found that major cement manufacturers were controlling the cement market.

On June 20, 2012, the CCI’s chairperson and six members passed two orders, declaring that the CMA and cement makers had acted in violation of the Competition Act, and imposing a total penalty of Rs 6,316.59 crore.

The chairperson had initialled all the pages of both the orders. On the last pages of both orders the chairperson and six members appended their signatures without any date.

One of the appellants argued before the Compat that the rules say that only the person who hears the matter can decide, and since the chairman had not heard the arguments of the cement companies at the hearing held between February 21 and 23, the order was “vitiated”.