MRTPC scanner on cement price hikes, India

MRTPC scanner on cement price hikes, India
Published: 10 October 2007

Cement makers may no longer be able to pass on the responsibility for fluctuating prices to their dealers. The Monopolies and Restrictive Trade Practices Commission (MRTPC) is all set to expand the scope of investigation and ask cement companies to furnish invoices and other evidence to prove their claim that they did not have any say on the price charged from consumers by their dealers.  
The commission will now look into how much influence companies have on the final price that dealers charge from the consumers. Some companies that are facing a probe by the commission’s investigation wing have claimed that they do not give any instruction or indication to traders on the final price, which industry observers said often varies from place to place.  
Cement makers will have to furnish invoices and other evidence to prove their claim to the investigation wing of the commission. The director general of investigation and registration (DGIR) attached to the commission is also expected to seek a clarification on the issue from cement manufacturers’ association and dealers. Fourteen leading cement makers are facing the probe.  
When contacted by ET, cement manufacturers’ association officials declined to comment on the issue.  
The companies will also have to explain to DGIR what steps they have so fare taken in response to suggestions from finance minister P Chidambaram and commerce minister Kamal Nath to ’moderate’ prices. The commission, which recently sent notices of enquiry to 14 leading cement makers in a case of alleged cartelisation, is also planning to expand the scope of the probe to the entire industry.  
Earlier notices were issued after the DGIR said in a preliminary report that there is a prima facie case of collusion. That conclusion was arrived at after analysing the prices, demand, capacity utilisation and expansion in 2005 and 2006 to find if price increases were justified. The DGIR did not buy the argument that costlier raw materials and the tight demand-supply situation had sparked off the price rise. According to him, price increases far exceeded higher production cost.  
The Builders’ Association of India has also complained to the commission about alleged cartelisation in the sector. The industry, however, dismissed the charges as baseless. It said the price increase is merely a matter of demand and supply.