Cartel in steel sector needs to be probed: competition panel
The Financial Express, April 29, 2009, Page 13
New Delhi: Alleging the government of distorting competition in the steel sector, a CCI-sponsored study has suggested that the competition watchdog should investigate the HR coil industry, which is dominated by a few top producers.
The study prepared by Indicus Analytics said, “The CCI should investigate and take a view on how to deal with potential anti-competitive behaviour in one segment of the industry ... the HR coil segment is quite apt since it has high concentration level”.
The study said there is no doubt about the concentration level in certain products market “such as hot rolling coils is significant with the dominance of a few at the top”.
Hot Rolling (HR) coils are a vital steel input for consumer industries like automobiles. The study further added that the Competition Commission of India should also probe in captive mining and priority allocation of mines to some players, which is an indirect means of subsidisation.
“The difficulty with captive mining as a concept lies in the fact that it first creates a dominant position for the mineral and allows non-competitive pricing,” the report said. Though the industry is concentrated in some segments, the study said, setting up an independent steel regulator will be “against the standard philosophy of regulation”.
At present, to informally control the steel price, the government works on the assumption that there are a few steel producers and they can be talked to uniformly cut the prices to fulfill its objective.
however, the study said that this way the government is bringing in more distortions than competition in the steel industry. “Such government intervention related distortions are likely to adversely affect investment plans of incumbents,” the study said.
—PTI
The Financial Express, April 29, 2009, Page 13
New Delhi: Alleging the government of distorting competition in the steel sector, a CCI-sponsored study has suggested that the competition watchdog should investigate the HR coil industry, which is dominated by a few top producers.
The study prepared by Indicus Analytics said, “The CCI should investigate and take a view on how to deal with potential anti-competitive behaviour in one segment of the industry ... the HR coil segment is quite apt since it has high concentration level”.
The study said there is no doubt about the concentration level in certain products market “such as hot rolling coils is significant with the dominance of a few at the top”.
Hot Rolling (HR) coils are a vital steel input for consumer industries like automobiles. The study further added that the Competition Commission of India should also probe in captive mining and priority allocation of mines to some players, which is an indirect means of subsidisation.
“The difficulty with captive mining as a concept lies in the fact that it first creates a dominant position for the mineral and allows non-competitive pricing,” the report said. Though the industry is concentrated in some segments, the study said, setting up an independent steel regulator will be “against the standard philosophy of regulation”.
At present, to informally control the steel price, the government works on the assumption that there are a few steel producers and they can be talked to uniformly cut the prices to fulfill its objective.
however, the study said that this way the government is bringing in more distortions than competition in the steel industry. “Such government intervention related distortions are likely to adversely affect investment plans of incumbents,” the study said.
—PTI
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