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Infrastructure

CCI concludes two-day search drive against cement giants on alleged price cartelisation

Updated : December 10, 2020 08:59 PM IST

The CCI conducted these searches based on series of complaints raised by builder associations in 2018-19 and again in 2020.

In a setback for cement giants, the Competition Commission of India (CCI) on Wednesday and Thursday (December 9 and 10) conducted search operations at the offices of some cement companies. The searches were conducted based on suspected price cartelisation by these cement majors, sources privy to the developments told CNBC-TV18

"CCI continued searches at office premises of cement companies. The searches which ended in the evening today were at ACC, Ambuja Cement, Ultratech, Shree Cement, Cement Manufacturers Association, Dalmia Cement etc. These searches were in Delhi, Mumbai, Chennai and Bengaluru," sources in the know told CNBC-TV18.

"The investigations are still underway on the basis of data collected from these searches," said people familiar with the matter.

Also read: Cement stocks fall after CCI raids; ACC, UltraTech, Ambuja shares down 2-3%

According to multiple people familiar with the development, the CCI conducted these searches based on series of complaints raised by builder associations in 2018-19 and again in 2020.

"Real estate builders association CREDAI in May 2020 had appealed to the government to curb the irrational rise in cement and steel prices. CREDAI in a representation to the government had said that despite the stoppage of all construction activities as per the nationwide lockdown norms due to COVID-19, there has been a sudden, steep increase in prices of essential raw materials such as cement and steel by 40– 50 percent."

This indicates cartelisation and monopolistic trade practices of the cement and steel manufacturers. Given developers’ wafer-thin margins, it will lead to an inevitable increase in the construction and overall project costs, hurting homebuyers. Accordingly, CREDAI had sought immediate government intervention in addressing the abrupt anomaly in cement and steel pricing. CREDAI’s note that was shared requesting for immediate intervention for controlling the steep hike in the prices of cement and steel-amidst COVID crisis," sources close to the development said.

Also read: India Cements acquisition reports baseless; looking at organic growth: Shree Cement

CNBC-TV18 was first to inform the readers on Wednesday that CCI was doing search operations against cement giants based on suspected price cartelisation and these searches concluded on Thursday evening.

Meanwhile, on Thursday, a lot of cement companies came out with their disclosures to stock exchanges. Dalmia Cements said CCI has initiated investigations for alleged violations under section 3 of the Competition Act. The company added that the company has conducted business in compliance with competition laws, cooperating and the company is cooperating with the authorities.

During the day, ACC and Ambuja Cement said they have acted and will continue to act in compliance with competition laws and are fully cooperating with investigations.

Similarly, Kolkata-based Shree Cement said it has acted and will continue to act in compliance with competition laws and it is fully committed to fair competition.

Meanwhile, queries sent to Ultratech and cement manufacturers association remained unanswered despite repeated attempts. CNBC-TV18 will update this story once they reply.

(With inputs from Nigel D’souza)

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