The Competition Appellate Tribunal (COMPAT) today, in what could be termed as a landmark decision, remanded the cement cartel case back to the Competition Commission of India (CCI) for fresh adjudication.

Background

The CCI, through an order dated 20 June 2012, had penalised 10 cement manufacturers in India, namely Associated Cement Company Limited, Ambuja Cement Limited, Binani Cement Limited, Century Textiles and Industries Limited, India Cement Limited, JK Cements Limited, Lafarge India Private Limited, Madras Cement Limited, Ultratech Cement Limited and Jaiprakash Associates Limited, to the tune of INR 6307.32 crores for having engaged in cartel to fix prices of cement and earn super-normal profits. This penalty was imposed by the CCI @ 0.5 times the profit earned by the cement manufacturers for the period 2009 – 2011. In a separate but related matter Shree Cement Limited was also penalised to the tune of INR 397.51 crores for being involved in the cement cartel. This has been the highest penalty ever imposed by the CCI in a cartel case.

The cement manufacturers had appealed against this decision of the CCI before the COMPAT, which was ongoing for almost three years and met its conclusion today.

COMPAT’s Decision

The COMPAT in its order dated 11 December 2015, has set aside the matter on the ground of violation of principle that ‘only one who hears can decide’, and has directed the CCI to hear the matter afresh. The COMPAT while allowing the appeals, directed the CCI to hear the cement manufacturers and pass fresh orders after following just and fair procedure within a period of 3 months from receipt of COMPAT order. The parties are also entitled to refund of the 10% penalty deposited during the hearing of the case. The parties have also been allowed to make all legally permissible arguments before the CCI. The COMPAT gave directions to the CCI that only the parties, who had already applied earlier for conducting cross-examinations, be given an opportunity to do so. The COMPAT also noted that it was time now for the CCI to lay down comprehensive guidelines to conduct its proceedings in accordance with the principles of natural justice to ensure just and fair procedure. Shree Cement Limited’s appeal too was allowed on the grounds that the CCI order against it was based on the findings of the main cement cartel case and therefore the findings of COMPAT in that matter would be applicable to Shree Cement Limited’s appeal as well.

Comments

This decision is a welcome precedent for all the present and future cases pending either before the COMPAT or the CCI, where there is procedural prejudice caused to parties. However, it remains to be seen as to how the CCI will adopt this decision and make changes accordingly, if at all or move before the Hon’ble Supreme Court of India challenging the COMPAT’s decision.