The Competition Commission has imposed penalties of over Rs 48 lakh on industry bodies of jute mills and gunny trade as well as their executives for unfair practices over pricing of jute packaging materials.
The fair trade watchdog also observed that the Textiles Ministry's policy as well as provisions that require sugar mills to package sugar in "jute bags produced in India only, is undoubtedly against the principle of competitive neutrality".
The Competition Commission of India (CCI) ruling has come on a complaint filed by Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories Ltd and All India Flat Tape Manufacturers Association.
It was alleged that IJMA and GTA members were indulging in anti-competitive pact while fixing sale price of jute packaging material by issuing daily price bulletin for bags.
In its 71-page order, CCI said that Indian Jute Mills Association and Gunny Trade Association violated competition norms.
Subsequently, CCI has slapped a total penalties of over Rs 48.29 lakh on IJMA, GTA and their executives.
Penalty of Rs 35.42 lakh has been imposed on IJMA's 24 executives and Rs 7.68 lakh on the association itself.
CCI has also imposed more than Rs 4.48 lakh fine on 19 GTA executives, besides Rs 35,169 on the trade body.
In the case of associations, the penalty translates to 5 per cent of each entity's average turnover in the last three financial years.
Besides, the Commission has asked the associations to "cease and desist" from anti-competitive practices.
In a release, the regulator said penalties also have been imposed on "the persons who were members of the Executive Committee of IJMA and the Executive Committee and the DPB Sub-Committee of GTA at the rate of 5 per cent of the average income of the last three financial years".
On the provisions of the Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987, the Commission said they were against the principle of competitive neutrality.
The Act places statutory requirement on the sugar mills to undertake sugar packaging using jute bags only.
This is "against the principle of competitive neutrality as the entities manufacturing matching products were denied market access," the regulator said.
It added: "Such a policy was further noted as not only restricting choice of customers like sugar mills but was also potentially found to be escalating the cost ultimately borne by the end-consumers.
"Accordingly, the Commission desired the Government of India to re-assess the current market situation for removing the market distortions arising out of such policy.
