The Competition Commission of India (CCI) has uncovered details of an alleged price-fixing arrangement among three cement companies supplying to Oil and Natural Gas Corporation (ONGC), which are said to have been involved between 2007 and 2018, reported Reuters.
The case began after ONGC noticed something unusual in a cement tender. The identical pricing submitted by competing firms raised suspicion and eventually led to an antitrust probe.
IDENTICAL BIDS RAISE SUSPICION
The issue surfaced during a 2018 tender by ONGC for a cement order. When the bids were opened, the company noticed that all competing firms had quoted exactly Rs 7,000 per tonne.
ONGC questioned the unusual similarity. In response, an executive from India Cements reportedly explained that the number seven was his “lucky number”.
The identical pricing triggered concern within ONGC, which later filed an antitrust complaint against three cement companies.
INVESTIGATION POINTS TO LONG CARTEL PERIOD
The CCI conducted a detailed investigation into the matter. According to the regulator’s report, two companies, i.e., Dalmia Cement (Bharat), part of Dalmia Bharat, and Shree Digvijay, were involved in the alleged cartel between 2007 and 2018.
India Cements was also part of the arrangement for a shorter period between 2017 and 2018.
The investigation report stated that the companies’ actions suggested coordinated bidding, discussions about supply patterns and efforts to limit competition in ONGC tenders.
EVIDENCE FROM EMAILS AND MEETINGS
The CCI report cited several pieces of evidence pointing towards coordination among the companies. Investigators referred to communications, meetings, internal emails and even admissions made during the probe.
According to the findings, some executives discussed supply patterns and price strategies while bidding for ONGC contracts. The report said the evidence showed attempts to share volumes and avoid competing directly with one another.
“SUPPORTED BY THE NUMEROLOGY FACTOR OF 7”
In one response to ONGC’s warning notice, India Cements defended its pricing decision. In a written submission, the company said the financial bid was influenced by global trends and also “supported by the numerology factor of 7”.
The explanation was included in the investigation records as part of the correspondence reviewed by the regulator.
EXECUTIVES NAMED IN THE INVESTIGATION
The CCI investigation also placed responsibility on several senior executives. These include Rajeev Nambiar, former managing director of Shree Digvijay, YH Dalmia, chairman of Dalmia Bharat, and N Srinivasan, former managing director of India Cements.
The report also referred to testimony from Shree Digvijay senior vice president Prem R Singh, who said the identical pricing was meant to allocate almost equal volumes and revenue among the companies.
ALLEGATIONS OF COORDINATED TENDER FILING
According to the report, executives from rival companies were involved in assisting each other during tender submissions. In one instance, Singh reportedly visited Dalmia’s office to help with filing a tender bid in 2018.
Investigators also found that companies compared the rail freight distance between their factories and ONGC delivery points. These calculations were used to determine how volumes could be shared while avoiding competition.
Excel sheets were reportedly prepared to compare distances and plan how contracts could be divided among the companies.
PROBE FINDS EFFORTS TO BLOCK FOREIGN COMPETITION
Shree Digvijay and Dalmia also targeted foreign companies participating in the tenders by raising what the report described as “prickly issues”. They repeatedly lodged complaints with the government, questioning whether overseas bidders had the required certifications and arguing that New Delhi should prioritise domestic firms over foreign competitors.
The foreign bidders included Texas-based Schlumberger, now known as SLB, the world’s largest oilfield services provider, UAE-based Classic Oil Field Chemicals, and Bell Weather. None of the three companies responded to requests for comment.
Investigators concluded that the cement firms at least once attempted to pressure ONGC to cancel foreign bids by planning to “restrict supply” of cement to the oil explorer, a move that would violate antitrust laws.
Meanwhile, the involved cement companies have been asked to respond to the investigation findings. After reviewing their responses, the CCI will issue a final order in the case.
If the allegations are upheld, the regulator has the power to impose heavy penalties. These can be up to three times the companies’ profits or 10% of their turnover for each year of wrongdoing.
