Mumbai: The Competition Commission of India (CCI) imposed a $1.1 billion fine on Thursday against 11 cement companies for price-fixing, in the largest-ever penalty ordered by the increasingly assertive regulator.
The CCI said the companies colluded to push prices higher by underutilising their plants and creating an artificial shortage of cement, the government said in a statement.
UltraTech Cement, part of the diversified Aditya Birla Group, Holcim-controlled ACC and Ambuja Cement, India Cements and the Indian unit of France's Lafarge SA were among those fined the equivalent of 50 percent of their net profit for the fiscal years ending in March 2010 and March 2011.
"The act of these cement companies in limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy," the CCI said in the statement.
The ruling, expected for several months, came after the close of stock market trade in Mumbai.
The record penalty is reflective of a crackdown on illegal market practices by a three-year old regulator coming of age in Asia's third-largest economy, which has seen a spate of high-profile corruption cases in recent years.
"As economies get bigger there is a greater need for competition laws to regulate corporates that have grown with those economies from either abusing their dominance or cornering markets through cartels," Samir Gandhi, partner at law firm AZB Partners, said ahead of the ruling.
The companies have been ordered to pay the fine within 90 days.
CCI, which is the equivalent of the European Commission or the U.S. Federal Trade Commission, is headed by Chairman Ashok Chawla, a former finance secretary.
"The CCI has demonstrated that it is willing to use its considerable fining powers which has made companies take competition law compliance particularly seriously," said Gandhi.
In April, the CCI heavily fined agrichemical companies United Phosphorous and Excel Crop Care, among others, after they were charged with colluding while submitting bids for a tender for a government project.
It is also expected to give a ruling next week on tyre companies including Apollo Tyres and CEAT over alleged price fixing, Chawla told TV channels on June 5.
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