Tough measures: CCI to fine cement cos on cartelisation

Cement companies may be in for a tough time on the streets tomorrow as the CCI order is due to come out on Wednesday. According to CNBC-TV18, the Competition Commission of India (CCI) could impose penalty on top ten cement companies by revenue, that are guilty of cartelisation. 39 companies have been investigated by the CCI so far.

The CCI investigated allegations that cement companies decreased production to inflate prices. The watchdog looked into the supply shortage issue and found that cement companies were running far below their plant capacity at around 70 percent, as per CNBC-TV18.

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Some of the names that cropped up are Ultra Tech cement, Ambuja Cement, ACC, India Cements, Madras Cements, Jaypee Cement, among many others. This probe was initiated way back in 2010. CCI has the power to impose a penalty of up to 8 percent of the average turnover of past three years.

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Cartels are arrangements between firms to not compete on price and product and are aimed at raising the price above the competitive levels. For consumers, cartelisation results in higher prices, poor quality and less or no choices of goods. However, in their defence, companies have said that the price increase was undertaken only to offset higher costs like freight, coal prices, etc.

One thing is certain for sure, specific cement companies are going to get hammered on the bourses tomorrow.