Home / Politics / Policy /  Seven large penalties imposed by CCI

New Delhi: Last week, chairman of the Competition Commission of India (CCI) D.K. Sikri said that the commission does not favour imposing fines and would rather want better compliance to competition laws. The chairman said the regulator aims to promote the culture of compliance among businesses, adding that monetary penalties should be rational and proportional.

In the past, however, the CCI has issued some major penalties on companies indulging in anti-trust activities but judicial appeals have either delayed or blocked the regulator from recovering penalty money, making it appear ineffective.

Here’s a list of large penalties imposed by the CCI.

Penalty of 6,715 crore on 11 cement companies: CCI passed an order in August 2016 imposing a penalty of over 6,700 crore on 11 cement companies as well as their trade association Cement Manufacturers Association (CMA) for cartelisation.

The companies that are penalised include ACC, Ambuja Cement, Binani Cement, Century Cement, Shree Cements,India Cements, JK Cements, Lafarge, Ramco, UltraTech and Jaiprakash Associates.

CCI said the action of the cement companies and CMA was found to be detrimental to the interests of the consumers as well as the whole economy.

According to CCI, the cement companies used the CMA platform and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market. It was also found that the companies were acting in “concert in fixing prices of cement" which contravenes competition norms.

Penalty of 2,554 crore on 14 car companies: CCI passed an order in August 2014 imposing a penalty of 2,554 crore on Maruti Suzuki India Ltd, the nation’s biggest car maker, and 13 other car makers for failing to sell spare parts in the open market, violating competition law.

The other companies include Mahindra and Mahindra, Tata Motors, Toyota Motor, Honda Motor, Volkswagen, Fiat, Ford Motor India, General Motors, Nissan, Hindustan Motors, Mercedes and Skoda.

The anti-trust regulator found that the companies, which were found to be dominant for their respective brands, abused their dominant position under section 4 of the Act and affected around 20 million crore car consumers.

Car companies denied access to branded spare parts and diagnostic tools to independent repairers, hampering their ability to repair and maintain certain car models. The monopolistic control over the spare parts and diagnostic tools markets allowed these companies to charge arbitrary and high prices. The competition regulator, hence, directed the car companies to “cease and desist from indulging in conduct which has been found to be in contravention of the provisions of the Act".

Penalty of 1,773 crore on Coal India: CCI had imposed a 1,773 crore fine on Coal India Ltd (CIL) and three of its subsidiaries for misusing their monopoly to supply poor quality coal and fixing prices. In December 2013, CCI found CIL and its three units—Mahanadi Coalfields Ltd, Western Coalfields Ltd and South Eastern Coalfields Ltd—guilty of abusing their dominant positions for supplying non-coking coal and having unfair fuel supply contracts.

The Competition Appellate Tribunal (Compat) in May 2016 quashed the decision of CCI to penalise CIL and its subsidiaries. Compat sent the case back to CCI to be heard again within two months.

Penalty of 630 crore on DLF: In 2011, CCI imposed a 630 crore penalty on DLF for abusing its dominant position with respect to three projects in Gurgaon.

DLF was penalized by the competition regulator for allegedly abusing its dominant position by imposing “unfair and discriminatory" terms on its buyers through buyers’ agreements.

CCI had imposed the fine on DLF for alleged unfair practices in the Belaire project in Gurgaon, which the company had challenged in the Supreme Court. Also, the Competition Appellate Tribunal had upheld the penalty of 630 crore.

Subsequently, the Supreme Court asked DLF to deposit the penalty amount in tranches, pending the final order. DLF has finally deposited the amount of 630 crore with the SC.

Penalty of 420 crore on Hyundai: CCI passed an order in July 2015, levying a penalty of 420.26 crore on car manufacturer Hyundai Motor India Ltd for violating anti-trust laws in the supply of genuine spare parts and diagnostic tools. CCI also found Mahindra Reva Electric Vehicles Pvt. Ltd, a subsidiary of Mahindra and Mahindra Ltd, and Premier, promoted by Doshi Holding Pvt. Ltd, in violation of competition laws.

While Hyundai was penalized 2% of its annual turnover in India for three years—2009-10, 2010-11 and 2011-12—Reva and Premier were exempted from penalties.

The regulator held that the three companies had entered agreements that adversely affected market competition and abused their dominant position in the supply of spare parts which affected services of independent mechanics to compete with authorised service stations.

Penalty of 257.91 crore on three of India’s largest airlines: CCI, in November 2015, passed an order imposing a combined penalty of 257.91 crore on three of India’s largest airlines—Jet Airways (India) Ltd, Interglobe Aviation Ltd (which runs IndiGo) and SpiceJet Ltd for alleged cartelization in fixing fuel surcharge on air cargo.

Penalties of 63.74 crore, 42.48 crore and 151.69 crore were imposed on InterGlobe Aviation, SpiceJet and Jet Airways, respectively. The amount was arrived at by calculating 1% of each airline’s annual revenue. The fine was imposed after investigating a complaint over the fixing of fuel surcharges in cargo transport.

The three airlines were also directed to cease and desist from indulging in anti-competitive practices.

The Compat stayed penalties totalling 106 crore in February 2016. The tribunal’s decision follows appeals filed by the two airlines—InterGlobe Aviation and SpiceJet—against the CCI order passed in November 2015.

Penalty of 72.96 crore on Lupin: CCI passed an order in August 2016, imposing a penalty of 72.96 crore on Lupin, which had refused to supply drugs to Maruti & Co., a drug wholesaler in Karnataka, on the ground that the drugmaker did not have a no-objection certificate (NoC) from the Karnataka Chemists and Drugs Association (KCDA). The regulator also fined KCDA 8.6 lakh for indulging in the anti-competitive practice of restricting supply of drugs to pharmaceutical companies in Karnataka.

Maruti & Co., which filed the petition, had contended that KCDA barred pharmaceutical companies from appointing new stockists in Karnataka unless an NoC was obtained from KCDA. It alleged that Lupin, on this ground, refused to supply drugs to Maruti & Co.

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Recommended For You
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout