Competition Commission of India imposes US$944m fine for cartelisation

The Competition Commission of India (CCI) has levied a fine of INR63.2bn (US$944m) on 10 cement companies whom it accuses of conspiring to fix prices in contravention of competition law. In addition, the Cement Manufacturers Association has been ordered to pay a INR7.3m fine.

Of the 10 companies, four – Jaiprakash Associates, UltraTech, Ambuja Cements and ACC – will bear the brunt of the penalties, accounting for 76 per cent of the total fine. The other firms fined today are Lafarge, Century, Ramco, India Cements, Binani and JK Cements. The fines were set at 50 per cent of each company’s net profits in 2009-11. In a separate ruling, Shree Cement was fined INR4.0bn for similar practices.

The CCI ruled in favour of a complaint brought by the Builders Association of India, which accused the cement companies of collusion. The Competition Commission found that the CMA had provided the 10  with a platform to share details, including on pricing and capacity utilisation, which had the effect of reducing supplies and production.

The immediate impact of the ruling has been a decrease in the share prices of the affected companies. Ambuja Cements shares were down 1.7 per cent, while ACC shares fell 1.4 per cent and UltraTech down 0.4 per cent.

However, the Financial Express quotes Religare Institutional Research as saying: "We remain positive on the cement sector as we believe we are amidst an upcycle -utilisation levels are likely to improve over the next few years with incremental capacity addition lower than demand. Post the correction, we recommend investors to accumulate cement stocks.”