Economic Times a censure and a INR 73 lakh penalty slapped by the competition regulator on the Cement Manufacturers' Association for facilitating cartel-like behaviour has left several other industry associations confused on what they can do and can't do as part of their mandate.
Their primary concern, while operating in a business milieu where the Competition Commission of India is watching, relates to the collection of data on prices, production and sales for use by various government arms. Such data collection by the CMA and its subsequent circulation among its members, was at the heart of the anti-trust case made by CCI against 11 cement manufacturers and the association; it fined the 11 companies INR 6,307 crore.
In the wake of the CCI order, associations representing the sugar, electrical and electronics, and cement sectors are considering stopping data collection for the government. Mr Abinash Verma director of Indian Sugar Mills Association said that "We collect data and supply the same to government agencies such as the department of food, whereas another government body can use this fact and penalise us.”
According to NA Viswanathan, secretary general of CMA, it stopped collecting wholesale and retail price in July 2011 - 10 months after the CCI began its investigation against cement companies. He said that "The order is a complete miscarriage of justice and doesn't appreciate the role industry associations play in bridging information gaps between sectors and the government. If the government feels it's convenient to collect data regularly from close to 150 units, then so be it. Either way, its stance needs to be cleared."
Justice SN Dhingra, one of the six members of CCI said that there is no ambiguity on data collection by industry associations. Mr Dhingra member (legal) of CCI said that "CCI has maintained that collection of data is not an offence, but sharing of data within an association is illegal.”
The government relies heavily on industry associations to collate and crunch sector-specific data, which it then feeds to the country's databases, as well as uses to compile official indices like the ones on industrial production and core sector. Mr Pronab Sen, former chief statistician of India and currently the principal advisor to the Planning Commission, estimates industry associations are currently supplying 20% of the government's data requirements.
Mr Sen feels the current insecurity felt by industry associations is essentially about dealing with a new law. He said that "There is a need to bring in clarity, but industry associations too must strive to understand the nuances of the Competition Act, which is at best an enabling Act and needs to evolve. So, effort is required from both sides equally to sensitise these bodies on their role."
Source - Economic Times
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