After penalising 11 cement companies last month for violating the provisions of the Competition Act, 2002, the Competition Commission of India (CCI) on Monday found Shree Cement also guilty of cartelisation. As a result, CCI has imposed a penalty of R397.51 crore penalty on Shree Cements, fixed at 0.5 times of the company's net profit for the year 2009-10 and 2010-11.
CCI had not found Shree Cement guilty in its June 21 order in which it had imposed a financial penalty of about R6,200 crore on 11 cement companies and their trade association — Cement Manufacturers Association (CMA).
However, the current CCI inquiry was based on a case received on transfer from the office of the director general (investigation & registration) of the erstwhile Monopolies and Restrictive Trade Practices Commission. The MRTP Commission had initiated the investigations on the basis of reports published in a business daily as well as on a letter of Builders' Association of India.
The CCI directed Shree Cement to “cease and desist” from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.
The CCI also found 11 cement manufacturers, including Shree Cement and CMA, in contravention of the provisions of the Competition Act, 2002.
“As the cement companies (except Shree Cement) were already found to be in cartel and penalised, the commission decided not to order remedies, including imposition of penalty on such companies again for the same period of contravention," an official statement issued by the commission said.
Incidentally, in end-June, the shares of Shree Cement went up by around 8% on Bombay Stock Exchange (BSE) as the company was not penalised by CCI back then for cartelisation.
On June 21, CCI had imposed financial penalty on 11 cement manufacturers, including ACC, Ambuja Cements, UltraTech Cements, Grasim Cements (now merged with UltraTech Cements), JK Cements, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements.