CCI cartelisation lens on onion traders

Prices of onions have skyrocketed in recent weeks to near Rs 80 per kg across the country, forcing the government to curb its exports

As onions continue to remain costly at about Rs 80 per kg, fair trade regulator the Competition Commission Of India (CCI) is looking into the possibility of cartelisation and hoarding by traders and other entities.

While  CCI is yet to start a formal probe into the matter, it is monitoring price movements as an earlier study commissioned by it had suggested that some cartels could be at play in the onion market and hoarding was done to keep prices high. Prices of onions, a staple ingredient for Indians, have skyrocketed in recent weeks to near Rs 80 per kg across the country, forcing the government to curb its exports and to import the commodity to meet the shortfall.

 

Sources said while CCI suspects there could be some cartels at play, it has yet to come across any prima-facie evidence of cartelisation. “If the commission comes across something substantial, the Director General (CCI's investigation wing) would be asked to carry out the investigations," a source said.

Onions have historically been a politically sensitive commodity and the steep jump in prices has come when elections are scheduled in some states in a few months.

The watchdog had earlier looked into the onion market to ascertain if there were any anti-competitive practices, but did not find any concrete evidence.

Availability of proper and reliable data is vital for the regulator to ascertain if there are violations of competition norms in a market, sources said, adding that the CCI is looking at data from various quarters, including those publicly available from the government.

Last year, a study instituted by the CCI found there were clear imperfections, including cartelisation and hoarding, which impact the price of onions. The study was conducted by the Bangalore-based Institute for Social and Economic Change.      "Results of seasonal indices, correlations, daily, monthly arrivals, their prices, etc, indicated existence of anti-competitive elements in the onion markets.

"A few big traders having well-connected networks with market intermediaries in other markets seem to play a major role in hoarding for expected high prices," the study found.

The CCI is also looking at the entire agriculture market as part of efforts to check any unfair trade practices. In this regard, it has held deliberations with the Commission for Agricultural Costs and Prices Chairman Ashok Gulati for a better understanding of the market. Besides onions, the prices of many other vegetables have increased in the recent past amid good rainfall.