(Reuters) - Eleven cement makers were slapped with $1.1 billion in fines on Thursday for price fixing, a record penalty from an increasingly assertive anti-trust regulator, the Competition Commission of India (CCI).
The CCI said the companies colluded to underuse their plant and create an artificial shortage of cement, the government said in a statement.
Analysts said the ruling, which was heavier than expected, reflected an increasingly tough approach by the three-year-old regulator and represented a coming of age for Asia's third-largest economy, hit by a spate of high-profile corruption cases in recent years.
UltraTech Cement (ULTC.NS), part of the diversified Aditya Birla Group, Holcim-controlled ACC (ACC.NS) (HOLN.VX) and Ambuja Cement (ABUJ.NS), India Cements (ICMN.NS) and the Indian unit of France's Lafarge SA (LAFP.PA) were among those fined the equivalent of 50 percent of their net profit for the fiscal years ending in March 2010 and March 2011.
"As economies get bigger there is a greater need for competition laws to regulate corporates that have grown with those economies from either abusing their dominance or cornering markets through cartels," Samir Gandhi, partner at law firm AZB Partners, said ahead of the ruling.
Executives from the fined companies denied price fixing.
"We have not indulged in any cartelisation," said O. P. Puranmalka, who heads UltraTech's cement business, adding the company will challenge the order.
"We deny the charges of cartelisation, there is no question about it," N. Srinivasan, managing director of India Cements told Reuters.
"I don't think this order is based upon any proof that they have," said Srinivasan.
The ruling, handed down after markets closed, comes five years after a similar order against 44 companies by the CCI's predecessor.
In April, the CCI fined agrichemical companies United Phosphorous (UNPO.NS) and Excel Crop Care (EXCR.NS), among others, for colluding over a government tender.
It is also expected to rule next week on tyre companies including Apollo Tyres (APLO.NS) and CEAT (CEAT.NS) over alleged price fixing, Ashok Chawla, the head of the CCI, said earlier this month.
Some industries in India such as telecoms see fierce price competition. Others, including fuel retailing and packaged foods, are governed by state-set prices.
"The CCI has demonstrated that it is willing to use its considerable fining powers, which has made companies take competition law compliance particularly seriously," said Gandhi.
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