By Rajat Roy
The Competition Commission of India (CCI) has sent notices to seven jute mills in West Bengal for alleged violation of competition rules.
The alleged violation of the Section 3(3) (a) and Section 3(1) of the Competition Act, 2002 pertain to manipulation and rigging of prices by jute mills, creating an imbalance in the packaging market.
The jute mills will have to answer the notices before June 30, failing which CCI will take penal action against them. Non-compliance in terms of furnishing of false statements and deliberate omission will also draw stringent action as per provisions of the Competition Act.
There are 54 operating mills in West Bengal involving livelihood of around 250,000 industrial workers and four million farmers. The jute industry has an annual installed capacity of producing 2.4 million tonnes (mt) of jute goods, but currently produces only 1.6 mt because of lack of demand.
CCI recently fined 12 cement companies for violating the Act and had kept the jute industry and state-run Coal India Ltd, the world’s largest coal producer, under its scanner.
On June 25, it sent the notices on charges raised by the Indian Sugar Mills Association, the National Federation of Co-operative Sugar Factories and the All India Flat Tape Manufacturers Association against the Indian Jute Mills Association (IJMA) and the Gunny Trades Association (GTA).
CCI has asked the mills for a compulsory furnishing of details on eight specific queries relating to price, actual transactions, quotations, bulletin displays, sale price and production and material cost, prices of twills (100/50 kg bags) and audited profit and loss accounts of the last three years. These bags are used for packing sugar to the tune of around 200,000 tonnes annually and valued at around Rs 1,500 crore.
As per estimates, sugar packaging defaults are in the region of 64 per cent by the 450-odd sugar mills. The government is yet to implement Section 9 of the Jute Packaging Mandatory Act (JPMA), 1987, against sugar mills violating the provision. Under the Section, the violation is a cognizable offence and the police will investigate the matter under the Code for Criminal Procedure.
The lobby alleged IJMA and GTA were working closely to cartelise the packaging material market by misusing their dominant position. They have accused the jute organisations for alleged rigging and manipulation of prices in the packaging market.
Further alleged is that IJMA and GTA are imposing unfair and excessive prices on jute bags, thereby, limiting the technical development of the market. CCI observed “some substance” in such allegations.
IJMA has sought protection against the allegation under Article 141 of the Indian Constitution and Section 62 of the Act and is fighting the charge.
By an order issued on April 25, 1996, the Supreme Court held the Jute Packaging Mandatory Act, 1987 valid.
As by Article 141, any distinction made on this behalf breaches the law of the land. By Section 62 of the Act, the Commission is also bound to perform within the confines of law and not in derogation to the JPM, Act, 1987.