Some cement makers as Ambuja Cement moved the Supreme Court against the NCLAT’s ruling that upheld the fair trade regulator CCI’s order to impose a penalty of Rs. 6,300 crore for alleged cartelization on 11 manufacturers. In August 2016, CCI had slapped approximately Rs 6,300 crore penalties on 11 cement firms including UltraTech, ACC, Ambuja, Ramco and JK cement as well as the industry body Cement Manufacturers Association (CMA) for indulging in cartelisation. CCI had imposed the highest penalty of Rs 1,175.49 crore on Aditya Birla group firm Ultra Tech.
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.
It bears emphasis that the question is not whether collection of data is per se illegal, the question is whether collection of data and facts and circumstances was sufficiently strong evidence of the existence of a cartel it stated. The tribunal erroneously accepted as an indicator of cartelization that “production fell drastically in all cases in November 2010-11 while that was not the case in November 2009-10”. “In arriving at this finding, the tribunal abandoned the regional analysis, and instead, identified 7 states in different regions of India, and analysed data based on which no pattern emerges and ignored its submission that decreasing production is a phenomenon which depends on forecasting demand,” Ambuja said.
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,” it said.
In August 2016, the CCI ruled that 10 cement (including ambuja cement) companies 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 penalty.