Cement cos guilty of cartelisation: MRTPC

Cement cos guilty of cartelisation: MRTPC
21 December 2007

The Monopolies and Restrictive Trade Practices Commission (MRTPC) has found 44 cement companies, including majors like Larsen & Toubro Cement, Birla Cement, Grasim and Associated Cement Company, guilty of cartelisation under the aegis of the Cement Manufacturers’ Association (CMA) between February and April 1990.
The Commission had began inquiries in October 12, 1990, after its investigative wing, the Director General of Investigation and Registration (DGIR), had alleged that the cement companies were involved in possible cartelisation.
The government also took notice of the development. Commerce and Industry Minister Kamal Nath said his ministry would look into the matter. “Cartelisation affects consumers; we will look into it,” Nath said.
Reacting to the Commission’s order, CMA president and the managing director of Shree Cement, HM Bangur, said: “We respect the Commission’s decision but our future course of action will be decided after a detailed study of the report.”
The Commission also agreed with the report of the DGIR that stated the prices were determined by the CMA in different states on the basis of prevailing market conditions through the local management of manufacturers. In its order today, the MRTPC has warned the cement producers and the CMA not to repeat the trade practice.
However, the order is unlikely to impact the cement firms much. “Under Section 37 of the MRTP Act, the Commission can only direct that the practice should be discontinued or not repeated, other than this the Commission is powerless to do anything against the companies forming a cartel,” said Naveen Goel, a corporate law expert.
Analysts too said the judgement would have little impact on the stock prices of the cement firms and also on future price hikes as the case was about two decades old and a near-term price hike was inevitable due to increase in raw material costs.
Published under Cement News