The Indian cement industry is dominated by a few companies, which signifies its oligopolistic nature. The top 20 cement companies are responsible for 70% of the cement production in India. The giant Pan-India players include ACC, Ambuja, UltraTech, Lafarge, India Cement, Shree Cement etc.
A cartel is basically a group of sellers or buyers who band together and try to eliminate competition. The cement market in India is highly concentrated with few players controlling the production of cement. Thus under the Competition Act, 2002 it becomes necessary to take a deeper look into the cement industry under Section 3, Anti Competitive Agreements. Section 3 basically states that no enterprise or person should indulge into the Anti Competitive Agreements so that it causes appreciable adverse effect on competition.
One such case of cartelisation by the cement companies was reported by the Builders Association of India to the Competition Commission of India. The CCI penalised 10 giant cement manufacturers in India for having engaged in cartel to fix prices of cement and earn super-normal profits. The penalty imposed was 0.5 times the profit earned by the cement manufacturers for the period 2009-2011. This has been the highest penalty ever imposed by the CCI in a Cartel case. But Competition Appellate Tribunal (COMPAT) has set aside the order of the CCI on the ground of violation of a principle ‘one who hears can decide’.