MRTPC raps 44 cement firms for cartelisation

Competition watchdog MRTPC today hauled up the virtual who’s-who of cement industry...

Competition watchdog MRTPC today hauled up the virtual who’s-who of cement industry, including the Birlas and Singhanias, for manipulating prices, prompting the Government to assure it will examine cartelisation. MRTPC held 44 cement manufacturers, including L&T Cement, Birla Cement, Grasim and ACC, guilty of cartelisation under the aegis of Cement Manufacturers’ Association. Immediately after the judgement, commerce and industry minister Kamal Nath said: “Cartelisation affects consumers, we will look into it.”

Passing a cease and desist order that runs into 130 pages, a three-member bench comprising Justice O P Dwivedi, MM K Sardana and D C Gupta directed the companies not to indulge in any such arrangement directly or through CMA. “In the present case, we have found direct as well as indirect evidence of concert. The existence of a common platform in the form of respondent No 1 (CMA), which frequently reviews the price-situation is a strong pointer towards existence of a cartel,” the Commission said. “Admittedly, respondent No 1 has been fixing prices during the control regime. The same apparatus continues even now without any change. In this scenario, the simultaneous and frequent rise in prices by the respondents, although within a narrow band, would clearly indicate that the respondents acted in a concert,” MRTPC said.

Reacting to the order, CMA President H M Bangur told “We will respect court’s decision and our future course of action will be decided after going through the order.” In the judgement, the Commission agreed with the report submitted by its investigative arm DGIR that said cement prices were determined by CMA in different states on the basis of prevailing market conditions through the local management of manufacturers.

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Stockists were given intimation of the prices fixed from time to time, said the DGIR. “We issue a cease and desist order against the respondents and direct them not to indulge in any arrangement directly or indirectly through the instrumentality of CMA or otherwise in fixing the prices of their produce in concert or in follow up of a concert.” The Commission said there was existence of a common platform in the form of CMA, which frequently revised the price-situation and it was “a strong pointer” towards existence of a cartel. “We have come to the conclusion that all the respondents have been indulging in restrictive trade practices and have been acting concertedly,” said the commission, directing them to file an affidavit of compliance of its directions within eight weeks.

During the investigation all the cement companies shied away from presenting agenda and minutes of the meeting of their marketing committee at the Apex level or at the zonal level, MRTPC observed. CMA and cement companies used these committees to fix the price at at retail level in different zones.

MRTPC had started its judicial investigation in October 1990 after issuing notice of inquiry and admitting the investigation report of DGIR.