22 May 2013

Competition Tribunal stays penalty on cement manufacturers

Competition Appellate Tribunal (COMPAT) has granted stay on penalty imposed on various cement manufacturers, subject to depositing 10% of the penalty within one month of its order. Earlier, the Competition Commission of India (CCI) had in its order dated 20-6-2012 imposed penalties adding up to around Rs. 6000 crore on various cement manufacturers on grounds of cartelisation in the cement industry.


Adjudication powers of Competition Commission

The COMPAT in its Order dated 17-5-2013, considered the scope and ramification of the amendment in the Competition Act in 2007. It held that though the Statement of Objects and Reasons is silent on omission of adjudicatory role of CCI, such role stood deleted because of substitution of the old Section 22 by a new one introduced by said amendment. According to the Tribunal, the case involved a serious issue as to whether the CCI has an adjudicatory role at all as declared by the Supreme Court in Brahm Dutt case prior to the amendment and in the case of SAIL India wherein order was passed post-amendment.        

The Tribunal also noted that there was also a question as to whether the CCI would be bound by the judicial discipline and the norms or it would only be an advisory, regulatory or an expert body, so as not to be bound by the strict judicial norms.


Quantum of penalty

The COMPAT held that there was a prima-facie case for grant of stay in respect of the penalties, which are of very substantial nature. Granting stay it observed that while imposing the penalties, the CCI had also taken into consideration, not only the 10% of turnover, gross-turnover and other factors, but also net profits earned by the cement companies.


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