Is cement the only cartel? Think again

The Competition Commission of India (CCI) has finally woken up to something that has been happening for long.

Media reports suggest the competition watchdog is likely to come out with an order penalising cement companies for alleged cartelisation.

It is widely speculated that the order of the competition controller, which was set up in 2002 and the rules for which were notified as late as 2009, is likely to be contested by the companies.

So a final outcome is unlikely in the near future and the companies can continue making money as before for some more time. The order is already pending for the last one year.

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[caption id=“attachment_352109” align=“alignleft” width=“380” caption=“Cartelisation can be defined as collusion of companies to fix prices, manipulate bids or to share customers. Photo: Laser2k/Flickr”]  [/caption]

Cartelisation can be defined as collusion of companies to fix prices, manipulate bids or to share customers.

A quick look shows there are more sectors that are liable for penalisation.

First and foremost, telecom. Were the increases in 2G call charges last year, begun by market leader Bharti Airtel and followed by the others, an indication of coordinated action?

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Secondly, aviation. With Air India and Kingfisher on the ropes, airfares have gone through the roof - forcing the Director General of Civil Aviation to Act. But there is some evidence that companies may have acted in concert to deny customers the benefits of competitive prices.

In 2010, December, when domestic air fares were surging, the CCI had told the civil aviation ministry about prima facie evidence of collusion of companies to jack up prices.

If the sector has gone off the hook of suspicion, the reason is that the companies are passing through a rough patch with an aggressive Kingfisher Airlines and state-run Air India keeping a low profile.

The third sector that could find a mention here is fuel retailing. Business Standard reported earlier that the Competition Commission is planning to write to Indian Oil, Hindustan Petroleum and Bharat Petroleum as their price actions are in unison.

“The coordinated approach of OMCs (oil marketing companies) is not only impacting consumer interest, it is also likely to create entry barriers for private players in the sector. We will write to them about it soon,” a senior CCI official was quoted as saying in the report.

The CCI seems to be concerned about the private firms here, though, rather than the consumers.

The fuel retailing sector, however, is a different ball game altogether, as the state-run companies make huge losses on subsidised diesel, kerosene and cooking gas, with only petrol and aviation fuel being charged at market-related prices.

These are just a few examples. There are many other sectors where companies take concerted action to deny any benefits to consumers.

The CCI, which has taken on the giants of realty (DLF) and stock exchanges (the NSE) in its evangelical zeal, may need sharper teeth to really deliver on its mandate to prevent cartelisation.