Mrtp Probe Into Cartelisation By Cement Majors

The Monopolies & Restrictive Trade Practices Commission (MRTPC) has launched a probe into consumer allegations that cement majors, including ACC, JK Cements, Indian Rayon and Sri Cements, have forged a cartel to fix artificially high prices for their products.

Consumers have alleged that the artificially high prices were not consistent with the cost of production incurred by the cement companies and the exercise was tantamount to unfair trade practice, said officials with the Commission.

The Cement Manufacturers Association of India, which is the representative body for the cement industry and includes all the top manufacturers in the country as its members, has been asked to furnish relevant information to the Commission on the issue.

 

The charges of cartel-forging in the cement industry come close on the heels of an earlier allegation by the Directorate General (Investigation & Registration) that cartels were being set up in the domestic banking industry to fix steeper lending rates. The DGIR is an investigative arm under the Department of Company Affairs.

Apart from fixing artificially high prices, cartel formations by producers discourage other players from entering the industry. In addition, this tacit non-tariff barrier prevents healthy competition among producers, which amounts to restrictive trade practice, said Commission officials.

The formation of cartels in the corporate sector is a major area of concern for the MRTP Commission, which had lost its powers to review merger proposals in the context of monopoly formations after the deletion of Chapter 3 of the MRTP Act in 1991. However, cartel formation is the latest form of imperfect competition that has become rampant in the Indian industry, said the officials.

The office of the Directorate General (Investigation & Registration) had earlier initiated a probe into the cartelisation of banks as part of its investigation into the steep prime lending rates offered to the industry.

Following allegations by industry leaders, the DGIRs suo moto investigation was launched to bust the cartel of banks if at all any evidence of such cartels was found.

Several national banks, including State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank, had been forwarded letters in connection with the probe.

The Directorate General (Investigation & Registration) had stated in the letter that the investigation has been undertaken to study the matter further, keeping in view the importance of the issue in the context of the economic development of the country.