Cement in India
The Cement Cartel Case
In 2012 the Competition Commission fined a group of cement companies for colluding on prices and output, a landmark case on cartels in India.
Cement’s few large sellers and regional markets make it a natural place for competition concerns.
What a cartel is
A cartel is a group of firms that agree, openly or secretly, to fix prices or limit production instead of competing.
The 2012 order
The Competition Commission of India held that a number of leading cement makers and their industry association had coordinated on prices and supply, and imposed a very large penalty, in the thousands of crores of rupees.
Appeals
The case went through appeals for years, showing how complex such proceedings are.
The lesson
When there are few sellers and a uniform product, firms may be tempted to coordinate. Regulators watch price patterns for signs of it.
If all producers raise prices by the same amount on the same day, investigators may ask if it was a coincidence or coordination.
Firms can price alike because costs are alike; evidence of an agreement is needed.
- A cartel fixes prices or supply.
- The CCI fined cement makers in 2012.
- Few sellers and a standard product invite collusion.
- Regulators need evidence of agreement.
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