1. Meaning

Ready-mix concrete territorial allocation occurs when competing ready-mix concrete (RMC) producers agree, formally or informally, to divide customers or geographic areas between themselves.

For example:

• Supplier A supplies RMC in Zone 1.
• Supplier B supplies RMC in Zone 2.
• Supplier C supplies a particular group of construction projects.
• Suppliers agree not to quote for customers located in another supplier's territory.
• Producers allocate infrastructure projects, developers, districts, or construction sites among themselves.

This can constitute a serious competition concern because territorial allocation is a classic form of market sharing.

Under Indian competition law, the most directly relevant provision is Section 3(3)(c) of the Competition Act, 2002, which covers agreements that allocate markets or sources of production or provision of services.

2. Why Territorial Allocation Is Particularly Significant for RMC

Ready-mix concrete has unusual logistical characteristics.

Unlike cement, RMC generally cannot be transported economically over unlimited distances because:

• concrete has a limited usable time after batching;
• transportation requires specialised mixer trucks;
• traffic conditions affect delivery;
• concrete quality can deteriorate with excessive delay;
• construction sites require precisely timed deliveries;
• pumping equipment may be required;
• batching plants need to be relatively close to projects.

Consequently, the geographic dimension of competition is extremely important.

But this legitimate geographic constraint is different from competitors agreeing among themselves to divide the market.

Legitimate situation

A supplier independently decides:

“Because of transportation costs and delivery time, our economically viable service area is approximately 30 km.”

Potentially unlawful situation

Three competitors agree:

“You will not supply projects north of the highway, and we will not supply projects south of the highway.”

The first is an economic business decision.

The second can amount to market allocation.

3. Indian Competition Act, 2002

Section 3(3)(c): Market Allocation

Section 3(3)(c) addresses agreements between enterprises engaged in identical or similar trade that:

allocate markets or sources of production or provision of services.

A geographic division of RMC customers can fall squarely within this provision.

Examples include:

• district allocation;
• city allocation;
• project allocation;
• customer allocation;
• construction-zone allocation;
• infrastructure-project allocation;
• allocation based on plant catchment areas.

Section 3(3) Presumption

Agreements falling within Section 3(3) are subject to a statutory presumption of causing an appreciable adverse effect on competition (AAEC).

Relevant factors under Section 19(3) include:

• creation of barriers to new entrants;
• driving existing competitors out;
• foreclosure of competition;
• benefits to consumers;
• improvements in production/distribution;
• technical, scientific and economic development.

For a genuine cartel, the commercial justification for dividing customers is generally much weaker than for ordinary vertical territorial restrictions.

4. Section 4 — Abuse of Dominance

Territorial allocation can also raise Section 4 issues where a dominant RMC producer or infrastructure operator imposes territorial restrictions.

Possible concerns include:

• denial of market access;
• discriminatory supply conditions;
• exclusion of competing RMC producers;
• limiting production or market development;
• leveraging control over a critical batching facility;
• imposing unfair geographic restrictions.

However, merely having a large geographic footprint does not establish dominance.

The relevant market must first be properly defined.

5. Relevant Geographic Market

This is particularly important for RMC.

Under Section 2(s), the relevant geographic market considers the area in which conditions of competition are sufficiently homogeneous.

For RMC, the CCI may examine:

• transportation costs;
• delivery time;
• availability of batching plants;
• road infrastructure;
• distance from plant to construction site;
• concrete specifications;
• availability of substitute suppliers;
• customer purchasing patterns;
• project location;
• local capacity.

Thus, the relevant geographic market might be:

• a city;
• metropolitan region;
• industrial corridor;
• district;
• cluster of neighbouring districts;

rather than the entire country.

Important distinction

A geographically narrow market does not justify competitors agreeing to divide that market.

Geographic limitations resulting from physical economics are different from collusive geographic allocation.

6. Major Case Laws

Direct Indian judicial decisions specifically involving RMC territorial allocation are relatively limited. Therefore, the strongest analysis combines Indian cement/construction-sector competition decisions with established Indian and foreign authorities on market allocation and territorial division.

1. Builders Association of India v. Cement Manufacturers' Association & Ors.

CCI, Case Nos. 29/2010, 52/2010, 58/2010, 59/2010, 60/2010, 61/2010, 62/2010 and connected matters, decision of 20 June 2012

This was a major Indian competition case involving allegations of coordination among cement manufacturers.

The CCI examined evidence concerning:

• production;
• dispatches;
• capacity utilisation;
• prices;
• market conditions;
• coordination among competitors.

The cement industry was found to involve significant competition concerns.

Relevance to RMC

RMC is closely connected to the construction-material supply chain.

The case demonstrates that competition authorities can look beyond an explicit written cartel agreement and examine economic and circumstantial evidence of coordination.

For RMC territorial allocation, relevant evidence could include:

• competitors systematically avoiding each other's territories;
• identical allocation patterns;
• unusual customer switching restrictions;
• coordinated quotations;
• communications between competitors;
• unexplained geographic boundaries.

2. Cement Manufacturers' Association v. Competition Commission of India

Supreme Court of India, 2018, concerning the cement-cartel proceedings

The Supreme Court considered the competition-law proceedings involving cement manufacturers and the role of the CCI in investigating anti-competitive conduct.

The cement cases are important because they demonstrate the importance of analysing the actual commercial conduct of competitors in a concentrated construction-material market.

Relevance

An RMC cartel could similarly involve:

• exchange of plant utilisation information;
• coordination of supply territories;
• customer allocation;
• coordinated pricing;
• production restrictions.

Territorial allocation may therefore operate as one component of a broader cartel rather than as an isolated agreement.

3. Excel Crop Care Ltd. v. Competition Commission of India

(2017) 8 SCC 47

The Supreme Court dealt with cartelisation and bid-rigging in the supply of aluminium phosphide tablets.

The Court addressed important principles concerning:

• anti-competitive agreements;
• bid rigging;
• penalty calculation;
• cartel conduct;
• competition effects.

Relevance to RMC

The case is important because territorial allocation can be combined with project allocation and bid allocation.

For example:

Supplier A wins projects in northern districts while Supplier B wins projects in southern districts, with each agreeing not to compete aggressively in the other's territory.

If the arrangement affects tenders, it may potentially involve:

• market allocation;
• bid rotation;
• bid suppression;
• cover bids;
• coordinated pricing.

Thus, an RMC territorial cartel can extend into public procurement.

4. United States v. Topco Associates, Inc., 405 U.S. 596 (1972)

This is one of the leading territorial-allocation cases.

Topco involved agreements among competing grocery retailers that allocated geographic territories.

The U.S. Supreme Court treated the territorial restrictions among competitors as a serious restraint of trade.

Principle

Competitors generally cannot agree:

“You operate in this territory and I will operate in that territory.”

Relevance to RMC

The analogy is exceptionally close.

If competing RMC manufacturers agree:

• Plant A serves East Delhi;
• Plant B serves West Delhi;
• Plant C serves Gurgaon;

and agree not to compete outside their allocated territories, the arrangement resembles classic horizontal territorial allocation.

This is fundamentally different from a manufacturer independently limiting its delivery area because of transportation economics.