Cartels In The Cement And Steel Industry And The Reason Behind The Unexpected Price Hike

Cartels In The Cement And Steel Industry And The Reason Behind The Unexpected Price Hike

Cement and steel are the most vital substances for the construction sector. The builders and construction industries are facing huge problems because of the unwanted increase in cement and steel prices over the past few years. The construction sector is in recovery after the lockdown period was lifted. Thus, the demand for cement and steel went high and the related manufacturers started using this opportunity to collectively increase their prices. This is a prime example of cartelization and the government has to take steps to curb such menace. In these cases, the government should take a more proactive role to make sure such anti-competitive practices are stopped at all costs.

What do you mean by Cartel in Cement and Steel industry?

A cartel is a group of companies in cement and steel industries that collude together to control the price of cement and steel.

What is the allegation of India-based Cement and Steel Industries?

Recently the Competition Commission of India (CCI) conducted searches at the offices of major cement and steel industries with the allegation of cartels controlling the price. Big companies in the steel and cement industry are trying to jack up their prices these days. Currently, in India, steel prices have gone up by 55% even if the cost of major inputs such as raw materials remains the same.

 

It was in the year 2019; India’s anti-trust body examined the complaints of cartelization in the cement industry. As per the action conducted, there are searches in December 2020 in major cement companies-UltraTech Cement offices and two subsidiaries of LafargeHolcim, the world’s largest cement maker.

These searches were in multiple offices across the country and recovered some electronic & physical data, pieces of equipment, and material. The investigating authorities also hired private IT experts to recover the data collected from the seizing. 

In the last decade or so, major cement companies in the country are accused vehemently of cartelization. A cartel is an organization that is formed by a formal agreement among a group of manufacturers. Such an organization aims to manipulate the price of its products by regulating its supply. Therefore, the companies that involve with the cartel can able to control the price, increase profit and dominate the market.  Such cartelization process is followed all over the world when it comes to the cement industry. Many associations and regulating bodies in the Indian construction sector are constantly warning government regulatory bodies against unfair practices being conducted by major cement companies.

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