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CCI examining cartelisation by cement companies

Recent increase in cement prices has not gone unnoticed either by the Commerce and Industry Ministry or by the Competition Commission of India (CCI). According to the written reply given by Piyush Goyal, the Minister of Commerce and Industry, in Rajya Sabha yesterday, the government has received complaints regarding hike in cement price and cartelization by cement companies.

“As per the information provided by Competition Commission of India (CCI) complaints regarding hike in cement price and cartelization by cement companies are under examination with them,” the Commerce & Industry Minister said in his written reply. In addition, two cases  alleging cartelization by cement companies are already filed which were referred to Director General for investigation in December 2016. However, proceedings in the matter have been kept in abeyance by the Hon’ble Guwahati High since September last year.

Last few months cement prices have seen sudden spurt which has taken several people in the market by surprise. For them it’s unusual that the cement price is going up while the demand is not keeping pace with the price rise. (See: https://www.sawdust.online/2020/news/cement-price-remains-at-elevated-level-in-may/)

While price in Northern markets hit all time high in May, in other regions too it remained at elevated level. However, demand for cement was adversely affected – first due to elections, then due to scarcity of labour, heat waves and scarcity of water. It’s not surprising that rising price and falling demand scenario caught the attention of government and CCI who examining the situation.

It may be recalled here that in August 2016, the CCI had slapped approximately Rs 6,300 crore in penalties on 11 cement companies, including UltraTech Cement Ltd, ACC Ltd, Ambuja Cement Ltd, Ramco Cements Ltd and JK Cement Ltd, as well as industry body Cement Manufacturers’ Association (CMA), for indulging in cartelization. However, the Supreme Court last year stayed the penalties imposed on the cement manufacturers.

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