Why in the news?

Indian antitrust watchdog CCI is investigating a cartelization case in the Steel Industry. The probe has found top steel giants such as Tata Steel, JSW Steel and SAIL along with 25 other steel makers in contravention of the competition law. It was alleged that these players were involved in price collusion over a varying time period between 2015 and 2023. The investigation has also held 56 top executives of these companies liable for breaching the law.

How did the ‘Cartel’ bust?

In a different case, the Coimbatore Corporation Contractors Welfare Association reached the Madras High Court in 2021, alleging 55% price hike over a six-month period by artificially restricting the supply to builders and consumers. The association alleged that the construction cost rose to 10-20 per cent because of the inflated steel cost. The Madras HC ordered the CCI to investigate the complaint. As per a Reuters report (2022), the CCI raided some small steel companies and the probe expanded to as many as 31 other companies and industry groups including top executives.

Legal provisions

Section 3 of the Competition Act bars any form of price coordination or exchange of commercially sensitive information between horizontally placed companies. The word ‘agreement’ is broadly defined in the law in order to cover secretive and clandestine communication between the companies affecting the consumers. As per the probe, the steelmakers were coordinating steel prices and creating an artificial shortage of supply affecting natural competition in the market.

Why does this case matter?

Steel is one of the eight core sectors of the Indian economy and a building block of infrastructural development. India is also the world’s second largest producer of crude steel, with a total installed crude steel capacity of about 180 million metric tons in FY2025. Steel directly feeds into real estate, highways, ports, railways, public works, the automobile industry, etc. Any case around price coordination has a debilitating effect on the economy as it results in the overall cost of infrastructure, housing, government spending and weakening the manufacturing competitiveness affecting exports. The three steel giants currently under investigation, i.e. JSW, Tata Steel and SAIL, hold significant market share of 17.5 per cent, 13.3 per cent and 10 per cent respectively.

What could be the implications of this probe?

Cartel investigations, like in this case, are conducted in a discreet manner given the sensitive nature of the evidence involved. It is reported that the CCI has asked the companies to submit their audited financial statements of the past eight financial years up to 2023. This information is asked to determine the quantum of penalty, which in the cartel cases would be three times the profit of the companies earned during cartelization or 10% of their global turnover. This sum could be huge in this case as companies like JSW and Tata steel have balance sheets running up to $14bn risking an unprecedented fine by the Commission. The CCI in the past has levied a total penalty of ₹6,300 crores on eleven cement companies.

What’s next to watch?

The CCI probe might take several months to complete before the final order. The companies under probe will be provided the opportunity to submit any objection and file for cross examination. If an anomaly is identified, the Commission is legally empowered to order further investigation. The parties might also opt for leniency before the final submission of the investigation report. Such applicants may avail a 0-100% penalty waiver depending on the type of cooperation extended.