In what is seen as a step forward in curtailing cartelisation, the competition appellate tribunal (COMPAT) has directed 11 cement companies to cough up 10 percent of a whopping Rs 6,307-crore penalty imposed on them by the competition watchdog on charges of cartelisation.

In a 40-page interim order issued on Friday, the 11 companies and their lobby group, the Cement Manufacturers’ Association (CMA), have been directed to pay Rs 630 crore within a month. Their appeal would be dismissed by the tribunal if they fail to follow the order, it was announced.

The issue dates back to June 2012, when the Competition Commission of India (CCI) had penalised some of the leading cement manufacturing companies — ACC, Ambuja, Binani, Century Textiles, India Cements, JK Cements, JP Associates, Lafarge India, Madras Cement and Ultratech Cement — besides the CMA on grounds of cartelisation and abuse of market dominance following a complaint filed by the builders’ association.

The companies moved COMPAT in March this year challenging the legality of the CCI order. They alleged certain “procedural irregularities” in investigation conducted by the director general of CCI. Following the appeal, COMPAT had directed CCI not to take any coercive step to recover the penalty amount from the appellants.

On Friday, a three-member bench headed by justice VS Sirpurkar observed that the “procedural irregularities are inextricably connected with the individual merits of the claims made by each company” and that a final decision will be taken only after appeals filed by each company is examined individually. 

The interim order states: “Under such circumstances, we would choose to grant stay to the penalties, however with a condition that the appellants deposit 10% of the penalties inflicted (Rs 6, 307 crore). We make it clear that the deposit of the penalty should be within one month from today. We also make it clear that if the penalties are not so deposited, the appeal shall be treated as dismissed without further reference to the Court.”

Terming the interim order a positive step forward, a senior official from CCI said, “This (step) will have a remarkable impact on business practices followed by the corporate bodies in our country. The corporate world will have to take a relook at their policies and ensure that they don’t engage in any kind of wrong practices and funny business.”