CCI’s report on cartelization to spell havoc on 11 major cement manufacturers

The Competition Commission of India (CCI) is soon expected to come out with its report on cement cartelization, which is likely to spell havoc for not less than eleven major cement manufacturers who were found guilty of being involved in price cartel, according to reports. Out of 39 cement companies, which were investigated by the competition watchdog CCI for a year on charges of price collusion and artificial scarcity, the top 11 companies by revenue will probably face the penal action.

The highest penalty prescribed in the Competition Act 2002, is 10% of three years’ average turnover. It is believed that the CCI will panelize the cement manufacturers by about Rs 3,000 crore. Out of the eleven companies, UltraTech Cement, Ambuja Cements and ACC are expected to be impacted the most since they control a third of the volumes in India while others like Jaypee Cements, India Cements and Madras Cements will too have to bear hefty brunt of the penalty. The cumulative turnover of the 11 companies is estimated to be around Rs 37,500 crore.

The CCI initiated its investigation on cartelization charges after Builders Association of India (BAI), a realtors’ body, alleged that the retail prices fixed by cement manufacturers were almost similar. The body complained that cement makers apart from forming a cartel to fix the commodity’s retail prices at almost similar levels, also deliberately trim down production to inflate prices.