Against NCLAT Order Upholding CCI Penalty
In August of 2016, CCI had slapped approximately Rs.6,700 crore penalty on 11 cement firms including ACC, Ambuja Cements, JK Cement, Ramco Cements and UltraTech Cement as well as the Indian Cement Industry body Cement Manufacturers Association for indulging in cartelisation.
The CCI ruled that 10 cement companies against whom the CCI had imposed penalties, had used the platform provided by the Cement Manufacturers Association and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market. It also imposed the highest penalty of Rs.1,175.49 crore on Aditya Birla group company UltraTech Cement.
The Builders’ Association of India had filed the petition in August 2016 against 10 leading cement companies.
The National Company Law Appellate Tribunal (NCLAT) had upheld the Competition Commission of India’s (CCI) decision to impose a Rs.6,700-crore penalty on 10 cement companies for cartelisation. The order stated that the cement companies had reduced production and dispatches across all sectors during a period when the demand from the construction sector was positive. Further the order stated that some of the cement companies had stopped booking sales orders in the non-trade segment and there was a shortage of supply of cement. The order went on to say that it found that the Commission has imposed a mere minimum penalty of Rs.6,700 crore. The verdict by the appellate tribunal comes two years after the CCI imposed the penalty.
The 10 companies against whom the penalty has been imposed include
Aditya Birla Group company UltraTech Cement (Rs.1,175 crore),
Jaypee Cement (now acquired by UltraTech: Rs.1,323 crore),
ACC (Rs.1,148 crore),
Ambuja Cement (Rs.1,163 crore),
JK Cement (Rs.128 crore) and
Century Textiles (Rs.274 crore).
Binani Cement, which may be acquired by UltraTech under insolvency proceedings, was also penalised Rs.167 crore.
Ambuja Cement has now moved the Supreme Court against the NCLAT’s ruling that upheld the fair trade regulator CCI’s order to impose a penalty of Rs .6,700 crore for alleged cartelization on 11 manufacturers. Challenging the NCLAT’s July 25 order, Ambuja said that the tribunal failed to appreciate that where a private association of industry has been tasked to collate data which is not competitively sensitive and does not reduce strategic uncertainty, such data would become available to the members of the association.
According to the company, the allegation of cartelization was based on data from 2007 onwards, which period was characterised by a range of increasing and decreasing dispatches for all the cement manufacturers. A mere fall in dispatches is not sufficient evidence of an anti-competitive conduct; there would be a case for investigation if there was a uniform fall in dispatches accompanied by a uniform increase in price, which was not the case here, the company further noted.
