Cartels behind food price rise, suspects CCI

Onion market to be the focus of a 'market study' commissioned by the competition watchdog


Deevakar Anand | June 2, 2011

Anti-trust watchdog Competition Commission of India (CCI)suspects that cartels in the agriculture, steel and paper sectors could have manipulated the market to cause food price rise. It has suo motu commissioned studies to ascertain the reasons for price volatility, especially in agricultural commodities, which has led to the spurt in food prices in the recent months.

“The CCI has decided to undertake detailed studies on these sectors to ensure that there are no distortions in pricing and the end consumer is not impacted in any way,” CCI chairman Dhanendra Kumar said on Thursday at a press coneference here. Kumar is due for retirement at the end of this week.

Global analytical and credit rating agency CRISIL will undertakethe 'market studies' on the paper and steel sectors.

CCI is commissioning a study on ‘Market Structures for Agricultural Commodities in India’ with a particular focus on onion market . Onion prices had touched a high of Rs80 per kilo in December, 2010.

The outgoing chairman stated that the prices of the agricultural commodities are more volatile than those of the non-farm commodities due to their low price elasticity and income elasticity and inherently unstable agricultural production due to risk and exogenous shocks. He said, “The purpose of the proposed study is to capture the supply side dynamics for select agricultural commodities including onion, the structure, degree and nature of market competition at each stage of the supply chain of these commodities”.

After Kumar demits office on June 5, CCI member HC Gupta would be the acting chairman till a fresh appointment is made.  Section 10.5 of the Competition Act 2002 provides for an interim arrangement in event of vacancy of the chairman's office.





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