New Delhi: The Competition Appellate Tribunal (Compat) Friday stayed a Rs6,300 crore penalty on 11 cement makers that had been levied on them for acting as a cartel but said 10% of the amount would need to be deposited pending their appeal.

The tribunal directed the companies to pay Rs630 crore of the collective fine that was imposed by the Competition Commission of India (CCI) in June last year. The appellate tribunal had said previously that no “coercive" steps should be taken against the cement companies.

“We would choose to grant stay to the penalties, however with a condition that the appellants deposit 10% of the penalties inflicted," Compat said in its order on Friday that was posted on its website.

The antitrust watchdog had investigated 39 cement companies after a complaint by the Builders Association of India (BAI), a lobby group of engineering and construction contractors. Eleven firms were fined 50% of their average profit for fiscal years 2010 and 2011, the period for which they were investigated.

The appeal against the CCI order will be taken up in August. If the companies fail to pay the 10% amount within a month, their appeal will be dismissed, according to the order posted on the Compat website.

The antitrust watchdog, in a unanimous decision last year by all six members and chairman Ashok Chawla, had also fined lobby group Cement Manufacturers’ Association (CMA) a token amount.

Among the companies, the worst-hit were ACC Ltd, Ambuja Cements Ltd, UltraTech Cement Ltd and Jaiprakash Associates Ltd, which were fined in excess of Rs1,000 crore each.

The companies in question also include Grasim Cements Ltd (now merged with UltraTech), JK Cement Ltd, India Cements Ltd, Madras Cement Ltd, Century Cement, Binani Cement Ltd and Lafarge India.

In its case before CCI, the builders group had argued that the cement companies had been indulging in “collusive price fixing" in 2009-10 and 2010-11.

In its 21 June 2012 order, CCI had said the watchdog had “considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market". After its investigation, CCI had also found that the cement companies had underutilized available production capacity “to reduce supplies and raise prices in times of higher demand".

The anti-trust watchdog had asked cement companies to “cease and desist" from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.

The order added that CMA had been asked to “disengage and disassociate itself from collecting wholesale and retail prices through the member cement companies and also from circulating the details on production and dispatches of cement companies to its members".

The amount of Rs6,300 crore is the highest total penalty CCI has imposed since it started functioning in 2009.

Phone calls made to CMA officials went unanswered and an ACC Ltd spokesperson declined to comment as the matter is sub judice. Spokespersons of the other companies could not be immediately reached for comment. UltraTech Cement ACC and Ambuja Cements acknowledged the lift tribunal’s order in statements to the stock exchanges.

BAI trustee Shankar Desai said it had expected that a minimum 25% payment would have been sought by the appellate body, as other tribunals ask for 25-50% to be deposited upfront.

“However... we agree with their decision. Cement companies are bound to pay if they want their appeal to be taken forward," added Desai, who was instrumental in filing the complaint.

Analysts said the 10% upfront payment will have no substantial impact on the profitability or the cash flows of the companies.

“The amount is not a big deal for the companies, and I am sure they will go ahead and deposit this it with the tribunal to take the case forward. As and when they win, they will be given back this money." said V Srinivasan, sector analyst at Angel Broking Ltd.

This is a corrected version of an article that was published earlier. It has been amended to reflect details of the order and the amount that is being sought from the cement companies.

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