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CCI orders investigation into alleged cartelisation by paper mills

August 30, 2014

The Competition Commission of India (CCI) has ordered an investigation into an alleged cartelisation by the major paper manufacturers in India. The complaint, filed by Sivasaki Master Printers Association, alleges that the big paper mills who have large coverage over most of the domestic market have conspired to increase price.

The paper manufacturers being investigated or being named in the complaint include ITC – Bhadrachalam, Andhra Pradesh Paper Mills (IP APPM), JK Paper Mills, West Coast Paper Mills, Ballarpur Industries, Seshasayee Paper & Boards, Tamil Nadu Print & Papers and Balkrishna Paper Mills etc. The Indian Paper Manufactures Association is also being investigated.

The CCI has also ordered its Director General to probe into the conduct of other paper manufacturers who have not been named in the complaint. This has been done as the Commission is of the opinion that price parallelism exists in the price information of the named parties as well as those not named in the complaint.

A cartel typically implies arrangements among more than two firms aimed at increasing prices through tactics such as a cut in production. Cartelisation leads to high prices and fewer choices. As per the Competition Act, the maximum penalty for cartelisation is three times a company’s profit or 10% of its turnover, whichever is higher.

The complainant also urged CCI to direct paper mills to maintain the price level for at least four months and to inform it of any planned increase in prices one month in advance.

Source: Media Reports

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