COMPAT stays Rs. 6,307 crore penalty on cement companies; Refuses to interfere with CCI’s “cease and desist”

The Competition Appellate Tribunal (COMPAT) has stayed the Rs. 6,307 crore penalty imposed by the Competition Commission of India (CCI) against various cement companies. However, COMPAT has directed the companies and the Cement Manufacturer’s Association to deposit 10% of the penalty amount within one month, failing which the appeal shall be dismissed..As reported by Bar & Bench, in June last year, the CCI had found 11 cement companies guilty of cartelization, and had imposed a penalty at the rate of 0.5 times of their profit for the year 2009-10 and 2010-11. The CCI had also asked the cement companies to “cease and desist” from “indulging in any activity relating to agreement, understanding or arrangement on prices, production arid supply of cement in the market”, a direction which the COMPAT has refused to interfere with..A host of Senior Advocates appeared before the COMPAT, including Gopal Subramainum (Lafarge), Iqbal Chagla (Ambuja Cements), and Abihshek Manu Singhvi (Associated Cement Co). The Informant, Builders Association of India (BAI), was represented by Senior Advocate OP Dua while the CCI was represented by Balbir Singh..The COMPAT also stated in its order that there was a need to examine whether the CCI was an adjudicating authority following amendments to the Competition Act of 2002, and that,.“A serious issue has, therefore, arisen as to whether what is in fact the scope and ramification of this amendment and whether the CCI has an adjudicatory role at all as declared by the Hon’ble Supreme Court in Brahm Dutt case and in case of SAIL India. Further, 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”.Rahul Goel, former Partner at Seth Dua Associates, represented the Informant Builder Assocaiton of India before leaving the firm for Dhir & Dhir earlier this year. “Having appeared before the COMPAT in other matters.. and having been involved in the cement matter from the very initial stage”, Rahul told Bar & Bench, “the order directing deposit of 10% of the penalty amount was as per expectations.” As for the plea taken by the Appellants that the CCI order was non-est since the Chairman of the CCI was not present at the time when oral arguments were made, Rahul observed that this contention required “serious examination”..Earlier this month, the COMPAT had stayed another order of the CCI imposing a penatly of Rs. 54 crore on the Board for Control of Cricket in India, after the CCI had held the BCCI to be guilty of abuse of dominant position.