The Hindu : Tamil Nadu / Chennai News : Cement firms move Court against MRTPC decision

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Thursday, Feb 21, 2008
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Tamil Nadu - Chennai

Cement firms move Court against MRTPC decision

A. Srivathsan

Commission unearthed restrictive practices, existence of cartel
Claims it has strong evidence on charges

CHENNAI: About 17 cement companies, including the Cement Manufacturers Association (CMA), have gone on appeal to the Supreme Court against the Monopolies and Restricted Trade Practices Commission (MRTPC) decision on cement cartelisation.

The MRTPC, after looking into complaints of price fixing and restrictive practices by cement companies, found that the cement companies adopted restrictive practices and a cartel existed. It sent notices to about 42 companies, including the Cement Manufacturers Association (CMA), in December 2007.

When contacted, representatives in the MRTPC said they had strong evidence to prove the existence of a cartel and price fixing. Their conclusion was well found.

Gayatri Agencies, a cement dealer in Kanchipuram, had filed a complaint with the MRTPC, stating that manufacturers imposed restrictions on them on the price, sale and distribution of cement.

The CMA denied the existence of a cartel. A cement manufacturing company official said informal exchange of prices among cement companies could not be construed as price fixing.

Cement stockists interviewed in Chennai and around and wishing to remain anonymous say cement is the only product where the manufactures never disclose the amount and the discount they would offer to dealers in advance. They say the manufacturers suggest to the dealers that the cement bags be sold at a fixed price, and discounts, if any, would come at the end of the year.

In other products, the discount, either in terms of percentage against the retail price or volume-based incentives, are announced in advance. This arrangement allows the stockists to vary the price and sell them at levels suitable for them.

If left to them and discounts are known in advance, they could offer discounts up to Rs.5 per bag, say the cement stockists, who also confirmed that only in the last few years had such a restrictive mechanism has been introduced to maintain a fixed price.

A marketing official of a cement company said each product followed different procedures, and cement manufacturers had their own way of selling the product.

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