Date:21/12/2007 URL: http://www.thehindubusinessline.com/2007/12/21/stories/2007122151961000.htm

Back MRTPC finds 44 cement cos guilty of cartelisation

Directs 41 of them not to fix prices through CMA

Our Bureau

New Delhi, Dec. 20 More than 17 years after it began its inquiry into the issue, the Monopolies and Restrictive Trade Practices Commission (MRTPC) has found top cement companies including Dalmia Cement Ltd, Madras Cements Ltd, Shree Cement Ltd, Gujarat Ambuja Cements Ltd, and ACC, among others, guilty of cartelisation under the aegis of Cement Manufacturer’s Association (CMA) during the period February to April 1990.

“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,” said a three-member bench comprising Mr Justice O.P. Dwivedi, Mr M.M.K. Sardana, and Mr D.C. Gupta.

Directing 41 of the 44 firms not to fix prices in concert, the commission asked all these firms to comply with its order within eight weeks.

1990 inquiries

The commission started its inquiries in October 12, 1990 into possible cartelisation by cement companies after its investigative wing — Director General (Investigation and Registration) — alleged that CMA along with its companies “have been fixing the prices of cement in an arbitrary and unjustified manner keeping the prices of several cement manufacturers in the same region uniform in spite of the fact that cost of production of different units would be different.”

Citing the price list of cement in different stations in various regions of India, the Director General alleged there was a price hike effected by the respondents of about 30 per cent during February-August 1990.

The Director General further alleged that there was a manipulation of prices by the respondents thereby imposing unjustified costs on the consumers, and that the respondents were indulging in cartelisation by fixing the retail prices of cement through this process.

Thus it was alleged that the respondents were violating the provisions of Section 2 (o) (ii) and Section 33 (1) (d) of the MRTP Act.

‘unjustified restriction’

The Director General also observed that prices of cement were being increased at short intervals from time to time without any corresponding increase in the cost of production which would amount to manipulation of prices so as to impose on the consumers “unjustified cost and restriction.”