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The Competition Appellate Tribunal (COMPAT) on Friday set aside the Competition Commission of India (CCI) decision imposing a cumulative penalty of Rs.6,316.59 crore on 11 cement companies on charges of ‘cartelisation’.
The COMPAT decision spurred intraday gains of more than 4 per cent in cement stocks on the BSE, including JK Cement (4.4 per cent), Shree Cement (2.7 per cent), Ambuja Cements (2.4 per cent), ACC (1.5 per cent) and UltraTech Cement (1.4 per cent).
The COMPAT asked the fair-trade regulator to adjudicate afresh the issues relating to alleged violation of the Competition Act by the companies. The tribunal said the CCI should pass a fresh order as early as possible, but within three months from the date notified. The appellate body said the companies shall be entitled to withdraw the amount deposited by them during the hearing, which was 10 per cent of their respective penalty amounts. The cumulative penalty was the biggest imposed by the competition watchdog.
In the order, COMPAT Chairman G. S. Singhvi and Member Rajeev Kher said: “We feel that the time has come for the Commission (CCI) to evolve a comprehensive protocol and lay down guidelines for conducting investigation/inquiry in consonance with the rules of natural justice.”
“It should be realised that much of the appellate litigation would be obviated if a just and fair procedure is adopted for conducting investigation and inquiry and passing of orders under the … (Competition) Act,” they added.
Welcoming the decision, N. Srinivasan, Vice Chairman and Managing Director, India Cements said: “It is a good first step for the cement industry. The order has cleared the air and perception created by the builders and others that cement industry is profiteering by acting as a group and holding prices high.”
The cement industry had always created capacity ahead of demand to ensure there was no shortage, Mr. Srinivasan said, adding that consumers today had a wide choice given the availability of cement of different quality and price. For instance, in Chennai the price ranged from Rs. 330 to Rs. 405 per bag of 50 kg, he said. Unlike other industries, the cement industry could only produce what it could sell as there were limitations to the extent that excess cement or clinker could be stocked, Mr. Srinivasan said. The COMPAT order was on the appeals filed by the cement companies and their industry body Cement Manufacturers Association against two CCI orders passed in June-July 2012.
The CCI order followed a probe into complaints, including from the Builders Association of India (BAI) against alleged price cartelisation among cement firms.
From: The Hindu