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CASE STUDY 04

SEPTEMBER 2013

AN ANALYSIS OF THE INDIAN CEMENT CARTEL

VIS-À-VIS THE EUROPEAN CEMENT CARTELISATION

Cement Cartel in India and European Union

A cartel is basically a group of sellers or buyers who

band together and try to eliminate competition.1

Standard of proof in cartel cases has been very high

since the beginning. The major problem with any form

of cartel is busting. Actual applications of those

standards have left many people dissatisfied. Looking

at the trend of recent cement case in India and

Europe - more specifically Germany, it is explicit that it

depends on the judges how they look at evidentiary

matters. Judges have a huge freedom in assessing the

evidentiary matters and each case is necessarily

different. Cartels are like cancers on the open market

economy. Cartels destroy competition and cement

cartelisation has caused serious harm to many

developing economies and consumers.

India: The recent order2 of CCI3 blamed the cement

industry for deliberately producing less to earn higher

profits. In the cement cartel case busted by CCI, the

Cement Manufacturers Association were found to be

fixing prices of cement in an arbitrary manner keeping

the prices of several cement manufacturers in the

same region uniform despite the fact that the cost of

production of different units were different. The

reason why time and again cement sector has been

prone to cartelisation is that such sectors are

generally characterised by high degree of

1

Section 2 (c) of the Indian Competition Act defines “cartel”

wherein it includes an association of producers, sellers,

distributors, traders or service providers who, by

agreement amongst themselves, limit, control or attempt

to control the production, distribution, sale or price of, or,

trade in goods or provision of services.

concentration, significant barriers to entry, similar

cost structures and mature technologies.

Europe: In Aalborg4 case, the European Union (EU)...