Economy & Market

Cos met regularly to control mkt share, hold back supply: CCI

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The Competition Commission of India says that cement firms met regularly to fix prices, control market share and hold back supply. Cement firms deny this and have filed an appeal.The Commission claims that cement companies in India had been organising themselves in a cartel for a while now, colluding, during industry body meetings, to fix production levels as well as the price of a bag of cement – in this case doubling it between 2004 and 2011 – so they could make windfall, illegal profits.Also decided during these meetings, says the Commission, was market share. If the allegations turn out to be true, everything that involves construction and infrastructure, from the taxes you pay for your roads, to the rentals you pay for your stores – and by extension the products you buy from those stores – are much more expensive, thanks to this illegal activity.Consequently, the CCI has slapped a fine totalling Rs 6,307.32 crore on the top-10 cement companies here and the industry body Cement Manufacturers’ Association (CMA). The companies accused in CCI’s report have denied all allegations of cartelisation and are determined to appeal the judgement.Cartels are agreements between enterprises to attempt to control the production, distribution, sale and price of goods and services. This could involve, say, allocating market share or sales quotas, or engaging in collusive bidding or bid-rigging in one or more markets.For consumers, cartelisation results in higher prices, poor quality and less or no choice of goods and services. In 2000, the European Commission fined five companies euro 110 million for global price-fixing cartel for lysine. Lysine is the most important amino acid used in animal foodstuffs for nutritional purposes.

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