Cementing the Competition Commission’s place

Landmark order against cement cartels is also a chance to step up advocacy and awareness of the law

Recently, the Competition Commission of India (CCI) delivered its arguably most high-profile order so far; slapping fines totalling Rs 6,300 crore on 11 cement companies for running a longstanding cartel that kept cement prices artificially high, limiting supply in the market. The CCI, which has so far been perceived as a not particularly firm enforcer of the new competition law, especially after lightly letting off some other cartels, is now in the spotlight.

What was the basis of the CCI's landmark order? This article does not comment on its merits, which will be determined in the inevitable appeals to follow, and will be settled only in the Supreme Court. But some pertinent observations arise from the case. The first observation is that once again, the CCI found that the cartel was operating under the cover of an association, in this case the Cement Manufacturers Association — in fact, it was being practically operated by the CMA. This disease seems endemic in the country. In several previous complaints brought before the CCI, trade associations have been implicated, or at least involved, for example, travel agents, LPG cylinders, explosives and banking.

In the cement case, the CMA was collecting, on a weekly basis, data relating to retail and wholesale prices and furnishing these to the Department of Industrial Policy and Promotion (DIPP) in compliance with the latter's directive; thus the CMA pleaded not guilty. The point the CCI made was that the DIPP never asked the CMA to disseminate the data to its members, only to the government. By freely distributing sensitive information about prices, despatches, movements etc, the CMA enabled its members to coordinate prices, production levels, etc leading to inordinately high prices compared to neighbouring countries like China and Pakistan.

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