Cements: Patently cartelised: CCI-backed study

FE reports

A study commissioned by the Competition Commission of India has said that the cement industry was dominated by a few big players and was “patently cartelised”.

The study, undertaken by the School of International Studies, Jawaharlal Nehru University, in January this year to assess the state of competition in the cement industry has said the primary objectives behind cartelisation were to divide the market amongst themselves and also price fixation.

CCI sources told FE that a copy of the study would be sent to the commerce & industry ministry. They, however, qualified that the CCI did not necessarily subscribe to the findings of the study, which was undertaken as part of an academic exercise and for capacity building of the institution, they added.

The study, however, points to three specific aspects of the cement industry and its players, which could be seen as anti-competitive under the country’s Competition Act. One, it says, the market appears to be split amongst companies. It, however, adds more evidence was required to show if the market sharing arrangement was reached by a tacit agreement between companies. Two, while margins for companies varied significantly, sale price was more or less the same. This clearly pointed to price fixation by the companies, either by covert or overt agreement, it said

Three, it points out that the huge difference between retail prices and the ex-factory price was unjustified, again indicating price fixation by companies.