Probe shows how Holcim units, Indian cement firms fixed prices

NEW DELHI • Swiss giant Holcim's India units and more than a dozen other cement manufacturers colluded to raise prices and restrict supplies for years, according to a federal antitrust probe.

The Competition Commission of India (CCI) has held top leadership of Holcim units ACC and Ambuja, market leader UltraTech Cement and 17 other companies liable for antitrust violations.

The investigation report is the most significant stage of the CCI probe that started in 2019. The report will be reviewed by CCI's top three officials, who can impose fines and will give firms a last chance to defend themselves.

Potentially, the cement giants could be fined millions of dollars. Together, the 20 companies control more than three-quarters of the over 500 million tonne installed cement capacity in India, the world's second-largest producer after China.

The report said executives of the companies discussed coordinated price hikes, with some officials using personal mail to communicate with rivals. WhatsApp was also extensively used.

One firm official's WhatsApp message said a "forum" of companies had agreed to gradually raise cement prices in some regions by five rupees (nine Singapore cents) to 10 rupees. "Price will go up in each week by equal amount," the message said.

It did not give details but typically, cement is sold in 50kg bags at between 350 rupees and 450 rupees a bag depending on the location and grade of cement.

Cement production is a lucrative business in India's booming economy, with high demand especially from rural housing and infrastructure companies.

An official at the Pavers and Blocks Manufacturers Association, whose members sell concrete paving blocks, told Reuters that price hikes by cement companies in recent years were coordinated, leaving no scope for cutting costs by switching suppliers.

"We sometimes pass the higher cost to consumers," said the official, who declined to be named since he does business with the cement companies amounting to 50,000 bags a month and was concerned about reprisals.

Overall, the CCI investigation concluded that the cement companies colluded in 13 states in India, with more than 50 industry executives involved in an "extremely organised manner".

Cement companies have been accused of price-fixing for over a decade. In 2016, the CCI imposed a US$800 million (S$1 billion) fine on 10 firms for fixing prices, including the Holcim units and UltraTech Cement, but the decision has been challenged at the Supreme Court.

Although cement prices vary across India, CCI's report showed they moved in the same direction.

In Kolkata and Patna, for example, cement bag rates fell for several months until January last year to reach 300 rupees and 350 rupees, respectively. Then, they rose in tandem over four months to touch 360 rupees in Kolkata and 390 rupees in Patna, before easing again, CCI said.

To ensure compliance with the informal arrangement, a verification system was designed. Investigators found a sheet listing firm names and plant locations, and assigning a rival firm to visit and verify production halts, it said.

Some executives like Shree Cemen's Anil Kaushik "confessed", admitting to sharing pricing data with a rival for "mutual benefit".

The report said he told investigators: "In the cement sector, no company can increase the prices in isolation and survive."

REUTERS