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AREIDA drags 3 NE cement majors to Competition Commission

Cement prices highest in Assam & other NE states, companies manipulating market to fleece consumers, alleges AREIDA president

BY OUR STAFF REPORTER

GUWAHATI, Sept 15: After the Assam Real Estate & Infrastructure Developer’s Association (AREIDA) dragged three top cement companies Star, Topcem and Dalmia Cements to the Competition Commission of India on September 2 last, the anti-trust watchdog has now agreed that prima facie a case of price fixing and market manipulation indeed exists.

After studying the petition filed on 2/9/16 by AREIDA alon with the evidence submitted, the Competition Commission has accepted that a prima facie case has been made out against the respondents. Taking cognizance of offence committed under Sections 3 and 4 of the Competition Act 2002, it registered a case, bearing no. 77/2016, against the three cement companies. The AREIDA had filed the case under Sec 19(1)(a) of the Act.

“These three cement companies have abused their domint position by leading a syndicate and indulged in rampant cartelization and manipulation of market price to fleece consumers of the Northeast. As a result of their illegal cartelization, the cement prices in the Northeast have for the past decade been the highest in India,” stated the Association.

AREIDA president PK Sharma said they filed a case under Sec 19(1)(a) of the Competitions Act 2002, for violation of Sec 3 and Sec 4 of the Act, notified by the Government of India.

“We have produced money receipts and supporting evidence to substantiate our submissions. It has been pointed out that all the three companies have recently hiked their rates and are now maintaining the same price level of Rs 360 per bag,” said Sharma. He said the money receipts of sale of these brands in Siliguri, which is 500 km away from Guwahati entailing additiol transportation costs, show that the price is surprisingly lower by Rs 110 per bag, selling at Rs 250 per bag.

“The evidence on record clearly establishes a tacit agreement among these three companies, which is later followed by the smaller companies. We have collected data from Kolkata, Siliguri, Ranchi, and Pat and placed these before the Commission,” said Sharma.

The AREIDA president further said that the price of cement in Assam and other parts of the Northeast is the highest in the country. This despite the fact that companies locally manufacturing cement here are heavily finced by taxes paid by the common man, in the form of numerous subsidies under the North East Investment and Industrial Policy (NEIIP). These include 100% income tax exemption, exemption from excise duty, transport subsidy on transportation of raw materials and finished products, manpower subsidy, power subsidy, genset subsidy, 30% capital subsidy, 99% vat exemption, and interest subsidy on working capital.

The policy was put in abeyance for new companies two years back, but for these cement companies, the subsidies continue to be availed of, as they were already registered by then — Sharma pointed out.

“Cartelisation by cement companies has become a serious issue, affecting the common man for whom we build homes.  We urge upon the government to continue with its efforts in larger public interest, for the cause of ‘affordable housing’ and ensure that only a legitimate price is allowed. We as a bulk purchaser of cement on behalf of homebuyers are extremely aggrieved by this proposed unfair price hike,” said the AREIDA president.

It may be mentioned that the Competition Commission had on August 31 last ordered 11 cement companies and their lobby group Cement Manufacturers Association (CMA) to pay a fine of Rs 6,714 crore for alleged cartelization. It had also held the lobby group of these manufacturers guilty of facilitating price collusion.