Will the cement cartelization case be decided anytime soon?

The Competition Appellate Tribunal stayed a 31 August order of anti-trust regulator Competition Commission of India finding certain cement firms guilty of cartelization


The cases and appeals filed by the cement companies against the CCI order will now be heard fully by the Competition Appellate Tribunal. Photo: Bloomberg
The cases and appeals filed by the cement companies against the CCI order will now be heard fully by the Competition Appellate Tribunal. Photo: Bloomberg

New Delhi: The case on cartelization in the cement industry has been pending for more than six years now.

On Tuesday, the Competition Appellate Tribunal (Compat) stayed a 31 August order of antitrust regulator Competition Commission of India (CCI) finding certain cement firms guilty of cartelization.

The cases and appeals filed by the cement companies against the CCI order, will now be heard fully by the Compat, likely beginning December.

This is not the first time the cases have come to the Compat. After an unfavourable verdict from the CCI, cement firms approached the Compat, which sent the case back to the regulator. Appeals against an order from the second decision of the CCI are now pending before the Compat.

So will a decision from the Compat bring finality to this case?

It is unlikely, since both sides will still have the option to approach the Supreme Court in appeal against the Compat’s decision.

The Compat chairperson, G.S. Singhvi, whose bench is currently hearing the cases, is also scheduled to retire in December, which puts a question mark on the resolution of the pending dispute.

Here is a timeline of events and orders passed in the dispute.

August-September 2009: CCI received a case from the Monopolies and Restrictive Trade Practices Commission (MRTPC) against cement manufacturers for alleged cartelization, after the repeal of MRTPC. The MRTPC had taken suo moto (on its own motion) cognizance and initiated an investigation on the basis of press reports published in Economic Times in May 2006 regarding increase in cement prices.

24 June 2010: CCI asked the director general (DG) with the MRTPC to investigate into the allegations of cartelization among cement manufacturers.

26 July 2010: The Builders’ Association of India (BAI) first filed an information or complaint with the CCI against the Cement Manufacturers’ Association (CMA) and 11 other cement manufacturing companies, for alleged anti-competitive agreements and abuse of dominant position.

31 May 2011: The DG submitted a report on the findings of the probe regarding cartelization allegations.

20 June 2012: CCI, ruling on the BAI complaint, imposed penalties against cement companies and the CMA, holding them guilty of contravention of the provisions of section 3 of the Competition Act. The companies were found to be indulging in cartelization.

30 July 2012: CCI, in a separate order, found the cement manufacturers and CMA indulging in cartelization and, hence, guilty of contravention of the provisions of section 3 of the Act. Cement manufacturing company Shree Cement was also found guilty and a penalty of 0.5 times of net profit was imposed for the period of breach (on each company).

Cement companies appealed before the Compat soon after.

11 December 2015: The Compat, ruling on appeals filed by the cement companies and CMA against the 20 June 2012 and 30 July 2012 order of the CCI, directed the regulator to hear the case again and pass a fresh order.

31 August 2016: The CCI found that cement companies were interacting using the platform made available by trade association CMA and indulging in cartelization by acting in concert, fixing cement prices, and limiting and controlling the production and supply in the market. The CCI found the case fit for imposition of penalty to the tune of Rs6,700 crore on 11 cement firms and the CMA.

7 November 2016: Dissatisfied with the CCI order, some cement companies moved the Compat appealing the commission’s order of 31 August. The Compat stayed the CCI orders against Shree Cement and ACC Ltd.

15 November 2016: The Compat stayed the 31 August order of the CCI against two entities, Jaiprakash Associates and CMA, found guilty of cartelization.

7 December 2016: The next date of hearing.

Shreeja Sen contributed to this report

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