CEMENT MANUFACTURERS CARTELIZATION EFFECT AND THE CCI`S ACTION- SUPREME COURT DECLINES TO INTERFERE- THE CARTEL IS PENALISED

Cement manufacturers and the CCI and The SC

The Supreme Court Wednesday declined to interfere with the Competition Appellate Tribunal (COMPAT) order directing 11 cement makers to deposit 10 percent of Rs.6,200 crore penalty imposed on them by the Competition Commission of India (CCI) for alleged cartelisation to control cement prices.

The apex court bench of Justice Gyan Sudha Misra and Justice Sudhansu Jyoti Mukhopadhaya, however, extended the deadline for depositing the part-penalty by a week from the June 16 to June 24.

The COMPAT had asked the cement manufacturers to deposit 10 percent of the penalty imposed on each one of them by June 16, saying that in the event of a failure their petitions would be deemed to have been dismissed.

The court said this amount to be deposited with COMPAT by each of the cement manufacturer would be put in term deposits in separate accounts in the name of each of the companies in nationalised bank.

The competition watchdog CCI had taken cognizance of alleged cartelization in the years 2009-2011. The average increase in the cement prices was 42 percent.

As some of counsel appearing for various cement companies questioned the quantum of penalty imposed on them on grounds that the profits from their their ventures too were taken for calculating the penalty, the court said all these issues could be raised before the COMPAT.

Senior counsel Abhishek Manu Singhvi, appearing for one of the cement manufacturers, assailed the CCI’s order which equated to price parallelism to cartelization.

Singhvi told the court that if one cement manufacturer pulled down the price, then others too had to follow in due course to remain in the competitive market.

The court said to determine whether there was cartelisation or not it will have to scan the prices of cement over the years.

The CCI by its June 20, 2012, order imposed the penalty on 11 cement manufacturing companies for allegedly forming a cartel to manipulate the market price of cement.

The cement manufacturers contended that COMPAT failed to consider their plea that the competition watchdog CCI’s order imposing hefty penalty was contrary to the material facts and factors which flew into the findings of the cartelization.

The tribunal had asked the companies to deposit 10 percent of the penalty imposed by the watchdog.