How PSU tender uncovered cartelisation by Indian cement cos, Pg13

Key Highlights:

• In 2018, ONGC detected suspicious bidding activity in a cement tender where bids were exactly Rs 7,000 per metric tonne.
• A Competition Commission of India (CCI) investigation found evidence of price collusion by cement companies targeting ONGC between 2007 and 2018.
• Dalmia Cement (Bharat), Shree Digvijay, and India Cements were implicated in the cartel, with India Cements involved during 2017-18.
• The CCI report cited communication, meetings, emails, and admissions as evidence of bid rigging and collusion.
• In FY25, Dalmia Bharat recorded revenues of $1.5 billion, Shree Digvijay $79 million, and India Cements $444 million.

Detailed Insights:

• The CCI investigation revealed attempts by Indian cement firms to manipulate supply patterns and exclude foreign bidders.
• The 90-page CCI report detailed tactics and evidence of wrongdoing, prompting scrutiny of domestic firms after investigations into foreign giants.
• The cement companies have been asked to respond to the report, and the CCI can impose fines up to three times the companies' profit or 10% of their turnover for each year of wrongdoing.
• UltraTech acquired India Cements in 2022.
• Following the Reuters story, shares of Shree Digvijay, India Cements, and Dalmia Bharat experienced declines.

Key Concepts Involved:

• Cartel: An association of manufacturers or suppliers who collude to control prices or production.
• Antitrust: Laws and regulations that promote fair competition and prevent monopolies.
• Bid Rigging: A form of collusion where companies conspire to predetermine the winner of a bidding process.