Competition Commission rejects ILMA complaint against 19 chemical importers

The Competition Commission of India (CCI) disposed of a complaint filed by the Indian Laminate Manufacturer's Association (ILMA) alleging formation of a cartel among 19 importers of phenol, a major raw material for making sunmica.

The informant is an association whose members are involved in the manufacture of decorative laminate sheets, popularly known as sunmica.

As per the complainant, local production of phenol is unable to meet domestic demand, leading to increased dependency on import of phenol. Majority of phenol consumed in India is imported by a few importers and it alleged that these importers have formed a cartel to control the supply and prices of phenol in Indian markets.

Subsequently, the Competition Commission of India (CCI) directed its director general to conduct an investigation into the matter, through an order passed in January 2017.

Director general (DG) is the investigation arm of the CCI.

According to the investigation report filed by DG, there was insufficient evidence to indicate cartel among the market players to manipulate prices of phenol in India during the relevant period.

"The erratic domestic price movement of phenol was stated to be internationally dependent on prices of crude, benzene, exchange rate, production, supply, demand and stock position of phenol, in addition to the inherent nature of petrochemicals being a risky commodity," it found.

No cogent evidence was available on record to indicate collusive action on part of the importers and traders, the report concluded.

The fair trade regulator took into consideration the DG's report, submissions of informant and opposite parties (OPs) and found that "this is a case where no evidence of meeting of minds or an agreement has been forthcoming despite an investigation into the matter".

"The Commission is cognisant of the fact that high phenol prices during February-March 2016, coupled with the fact that the importers, trader and brokers of phenol used to meet, though purportedly infrequently, do tend to raise some suspicion," it added.

But, the CCI added, in the absence of any corroborative evidence, in the facts and circumstances of this case, these OPs cannot be condemned of having indulged in an anti-competitive conduct of forming a cartel.

The 19 entities included Sachin Chemicals, Deepak Phenolics, B Chokshi Chem, Chemtrade Overseas, Yug International, Arintis Sales, Shubham Chemicals and Solvents, BMV Overseas, Shakumbhari Aromatics, and Sanjay Chemicals (India).

The other entities were Sonkamal Enterprises, C J Shah and Co, Apra Enterprises, Hazel Mercantile, Overseas Polymer -Vinmar Group Co, Kunjal Synergies, Haresh Petrochem, Ketul Chem, and Aarey Drugs and Pharmaceuticals.