Cement cartelisation probe to be widened

Cement cartelisation probe to be widened
Published: 29 June 2006

All cement makers in India are set to answer some uncomfortable questions in the next few days. The Monopolies & Restrictive Trade Practices (MRTP) Commission has asked its investigation arm to broaden the scope of its probe into the suspected cartelisation in the cement sector. The investigation wing, which is at an advanced stage of probing the practices of top three cement makers in Hyderabad, will now seek information from over 60 companies across the country.

According to commission sources, the director-general of investigation & registration (DGIR) will now probe the supply and price fluctuations in other cities, particularly Bangalore, where it suspects a cartel. It would start sending notices to all cement makers in the next few days.

The DGIR is expected to submit its report to the commission in two months. Once convinced about the cartel, the commission can issue a cease-and-desist order asking the companies involved to stop the practice. However, proving that an understanding exists among firms to cut the supply and influence the price is much more difficult than lining up circumstantial evidence to that effect, it is understood.

The alleged cartelisation in the sector first came to light when the company affairs ministry did a sample survey in Hyderabad recently. The large market share a few companies collectively enjoy and instances of crossholding among them buttressed the case for the initial probe.

It is learnt that one of the top three companies have a stake in another one and all the three share among themselves around 34 per cent of the country’s cement market. Reports about higher prices and unusual supply shortages have now provided the impetus for a wider investigation.