CCI asks kraft paper makers to desist from unfair business practices

The Competition Commission on Wednesday directed four associations of kraft paper manufacturers and their 115 members to cease and desist from unfair business practices.
They were found to have entered into anti-competitive agreements but the watchdog decided not to impose any monetary penalties as many of the entities are MSMEs and several of them adopted a non-adversarial approach during the probe.

Following a complaint by three federations/associations of corrugated box manufacturers, the Competition Commission of India (CCI) had ordered a detailed probe in August 2017.

It was alleged that various associations of kraft paper manufacturers, by way of periodic meetings and correspondences, directed their members to increase the price of the paper to be sold to the buyers, ie. corrugated box manufacturers. It was also alleged that they sought to create a condition of shortage to enforce the unjust price increase and shut the operation of the paper mills in a region collectively.

In a 362-page order, the watchdog directed the four associations and their 115 members to "cease and desist" from indulging in unfair business practices.

The complaint was filed by three groupings -- Federation of Corrugated Box Manufacturers of India, Andhra Pradesh Corrugated Box Manufacturers Association and Uttar Pradesh Corrugated Box Manufacturers Association.

The CCI has passed the order against four entities and their members. They are Gujarat Paper Mills Association and its 61 members; Northern India Paper Mills Association and its 16 members; Hyderabad Kraft Paper Mills Association and its 26 members; and South Indian Kraft Paper Mills Association and its 12 members.

"Keeping in mind the peculiar facts and circumstances of the case including the fact that the many of the kraft paper manufacturers were MSMEs and were going through economic and financial crisis as a fallout of COVID-19 pandemic, the CCI refrained from imposing any monetary penalty upon the infringing associations and kraft paper manufacturers," the regulator said in a release.

Further, the watchdog noted that several kraft paper manufacturers also admitted their wrongdoings and adopted a cooperative and non-adversarial approach.

"Thus, the CCI considered the aforesaid as the mitigating factors for not imposing any monetary penalty and issued a cease and desist order against the contravening entities," it added.