Indian producers issued with record fine on price fixing

Indian producers issued with record fine on price fixing
21 June 2012

Eleven Indian cement producers have been issued a total fine of INR60bn (US$1.1bn) for price fixing, the highest ever fine issued by the country’s antitrust authority in its three-year existence.

The Competition Commission of India (CCI) said in its ruling that the companies colluded to underuse their plants and create an artificial cement shortage. "The commission has found that the cement companies have not utilised the available capacity so as to reduce supplies and raise prices in times of higher demand," it said in its judgment.

It further added that: "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 companies penalised by the Competition Commission of India include Holcim companies ACC and Ambuja Cements., UltraTech Cement, Jaiprakash Associates, India Cements, Madras Cements and the local unit of Lafarge. The penalty on each company amounts to 50 per cent of profit for the fiscal years 2010 and 2011. The companies were ordered to pay the fine within 90 days.

Reuters quoted OP Puranmalka, head of UltraTech Cement as saying: “We have not indulged in any cartelisation.” He further stated that the company will challenge the ruling. India Cements managing director, N Srinivasan has also denied the charges.

Companies can challenge the regulator's orders in the Competition Appellate Tribunal, a quasi-judicial body, and then appeal to India's Supreme Court.

The ruling comes as demand for the construction material is weak due to sluggish economic growth and a fall in spending on infrastructure projects. The cost of raw materials such as coal is on the rise as well, putting pressure on producers’ margins.

Published under Cement News