Displaying items by tag: Cartel
Tanzania: Pascal Lesoinne, the chairman of the East African Cement Producers' Association (EACPA), has denied that a cartel exists in the Tanzanian cement market. His comments arose at a press conference in Dar es Salaam following action by the Tanzanian government to investigate cement imports from Pakistan.
"Repeated accusations of there being a cartel are nonsense as competition is fierce in the market and there are many players. Cement is a hot cake of which everybody wants to have a share," said Lesoinne in a presentation on the benefits of the cement industry to Tanzania's economy. Leading cement producers in Tanzania include HeidelbergCement, Afrisam and Lafarge. Lesoinne cited taxation and jobs as two principal benefits of Tanzania's local cement industry.
Confederation of Tanzania Industry (CTI) figures indicate that in 2012 over 200,000t of cement were imported from Pakistan to Tanzania. Industry players say it is difficult for local manufacturers to compete with imports, largely due to high costs of production in the country, with electricity costs in Tanzania being four times higher than in China and Egypt, according to EACPA figures. Lesoinne called for the government to create a 'level playing field' between locally produced and imported cement.
In late July 2013 the Tanzania government formed a seven person team to investigate alleged subsidies, tax evasion and the quality of cement imported from Pakistan.
Indian firms get a week more to pay fines
13 June 2013India: The Indian Supreme Court (SC) today refused to give interim relief to cement manufacturers in their appeal against the interim penalty imposed on them on charges of forming a cartel, confirmed for now by the Competition Appellate Tribunal (CAT). It did, however, delay the deadline for the penalty by over a week.
The CAT had told the companies to pay 10% of the total US$1.1bn penalty imposed by the Competition Commission of India (CCI) by 16 June 2013 and it posted their main appeal for August 2013. The manufacturers appealed against this to the SC. Now the deadline for payment has been moved from Sunday 16 June 2013 until Monday 24 June 2013. However, the court insisted on their complying with the CAT's interim order.
The order was imposed by CCI against 11 major cement producers including ACC, UltraTech and Ambuja and their association. The apex court refused to lift the penalty order or reduce the rate, despite long arguments over two days by senior counsel Abhishek Singhvi for UltraTech Cement and Ranjit Kumar for Jaiprakash Associates. According to the modified order, the amounts shall be deposited with the tribunal and kept in a separate fixed deposit with a nationalised bank. The deposit shall be renewable after six months. The amounts deposited, with interest, shall be dealt with by the tribunal at the time of the disposal of the appeals of the cement companies.
The case was originally filed by the Builders Association of India before the CCI, alleging cartelisation by the cement companies. The director general (investigation) of the CCI found evidence of formation of a cartel by the cement companies, with capacity utilisation held down to control prices. The penalty was calculated on the basis of the annual turnover of the companies in question over a certain period.
Indian firms cartel appeal heard
12 June 2013India: On 11 June 2013 the Supreme Court admitted the appeals of several cement manufacturers against a Competition Appellate Tribunal (CAT) order, which directed the cement companies to pay a penalty for allegedly forming a cartel. The case is scheduled to come up towards the end of the week ending 14 June 2013 after the reply of the Builders Association of India (BAI).
The cement companies argued that the penalty, fixed ad hoc at the rate of 10% of their worth, was huge and unjustified. If the firms do not pay the penalties, their appeal case (before CAT) will be automatically dismissed, according to the CAT order.
UltraTech Cement Ltd, argued that CCI did not find any prima facie case against the 11 companies picked by the association out of 42 major cement manufacturers but still the CAT imposed a penalty in an interim order. The deadline for payment of the penalties is 16 June 2013.
Among the cement manufacturers that have appealed to the Supreme Court against the CAT order are Jaiprakash Associates, Century Textiles & Industries and Madras Cements.
Turkish authority probes price setting behaviour
12 June 2013Turkey: Turkey's Competition Authority said on 11 June 2013 that it had launched a probe into the local cement producers Çimsa Çimento and Oyak Adana Çimento on allegations of price setting.
The authority said that data gathered during a preliminary inquiry was sufficient to open an investigation into whether or not the two companies had violated competition regulations by setting prices for white cement.
India: The Competition Appellate Tribunal (COMPACT) has ordered cement producers to pay 10% of a US$1.15bn fine imposed on them by the Competition Commission of India (CCI) for a price-fixing cartel. The tribunal asked 11 Indian cement producers to pay the fine within 30 days otherwise their appeal against the fine will be dismissed.
COMPAT had reserved its order over a batch of petitions filed by various cement producers and the Cement Manufacturer's Association (CMA) on 18 March 2013 after hearing them on an interim plea. In the petitions, the cement producers had challenged US$1.15bn penalty imposed on them by the Competition Commission of India (CCI) and a US$133,000 fine imposed on the CMA. The cement companies charged with cartel behaviour include Lafarge India, India Cement, JP Associates, Binani Cement, Ambuja Cement, Madras Cement and J K Cement.
The CCI had found cement producers were in violation of the provisions of the Competition Act, 2002 which deals with anti-competitive agreements, including cartels. The order was passed following probe by CCI Director General (Investigation) on a complaint filed by Builders Association.
South Korean cement producers retract price rise warning
24 April 2013South Korea: Leading cement producers in South Korea, including Tongyang Cement, Hanil Cement and Sungshin, have notified ready-mixed concrete companies and construction contractors that they will freeze cement prices for 2013. The move follows an investigation on suspected price collusion by the Fair Trade Commission.
The official notices from the cement producers attributed the decision to the financial difficulties experienced by most cement-consuming industries. Accordingly, the cement makers will soon cancel the invoices sent out to the consumer firms.
Since February 2013, cement producers have said they would raise cement prices by 9 – 10% in 2013 due to a rise in the prices of bituminous coal and other raw materials. The cumulative losses of Korea's six major cement producers since 2007 have been in excess of US$867m.
South Korea: The South Korean Fair Trade Commission has started an investigation into major cement companies including Ssangyong Cement Industrial and Hanil Cement for suspected price fixing. The companies had notified ready-mixed concrete operators that they would raise their cement prices by 9-10% in 2012.
On 9 April 2013 the commission sent investigators on a two day probe to seven cement producers: Ssangyong Cement Industrial, Hanil Cement, Tongyang Cement, Sungshin Cement, Lafarge Halla, Asia Cement and Hyundai Cement.
An industry source said, "Lately cement producers and ready-mixed concrete operators are at loggerheads over cement prices. It appears that the Fair Trade Commission is looking closely into the matter. In 2003, the commission had imposed penalties of US$22.5m for restricting the supply of cement to ready-mixed concrete makers in order to prevent them to use slag powder in place of cement."
Pakistan cement producers justify price rises
03 April 2013Pakistan: Cement producers have denied the existence of a cartel to Pakistan's Ministry of Industries. In a meeting with the ministry they reported that they are operating at the lowest rate of return and have passed on the bare minimum impact of inflation to consumers in the past few years.
At the meeting cement producers argued that no cartel existed in the industry because there is no uniformity in prices of cement, utilisation and market. The
price of cement per bag in Pakistan has only increased by up to 38% since 2005 despite input costs rising more than this level. Total equity of the industry is US$1.3bn and it has a 10% rate of return. In contrast, independent power producers (IPPs) are operating at 18% rate of return.
In an interview with the Express Tribune Waleed Sehgal, Director of Maple Leaf Cement Factory, cited examples of price rises in other industries that were more than cement. According to Sehgal the price of sugar had seen a peak rise of 400% since 2005, Urea a rise of 375% and di-ammonium phosphate (DAP) of 400%.
Sehgal stressed that prices of electricity, gas, coal and paper bag, labour cost and freight rate had increased manifold. "We have given the rationale behind the increase in cement prices to the Ministry of Industries," he said. He further said the industry was under debt of US$1.02bn, which it has to pay despite a low return.
Lucky strike for imports to South Africa
15 August 2012Pakistan's Lucky Cement received the 'all clear' for its cement imports from the South African regulators last week. The situation exposes the increasingly competitive market in the country after the South African Competition Commission cartel investigations in 2011.
Sales of Lucky Cement were originally shut down in 2011 due to accusations made by its competitors, including Pretoria Portland Cement (PPP) and Natal Portland Cement (NPC). They complained that Lucky was not complying with South African standards. South Africa's National Regulator for Compulsory Specifications (NRCS) then ran its independent investigation and released its results last week.
The regulator's full 28-day test found no evidence that Lucky Cement imports were non-compliant with regards to their quality. A minor infringement concerning underweight bags was found and fixed. However, about a week beforehand, Lafarge South Africa's CEO said that his company was considering approaching another trade body with concerns about 'low-quality cheap cement' imported from Pakistan.
More serious criticism came from the Cement and Concrete Institute when the NRCS admitted that it didn't know how much cement had been imported into South Africa so far in 2012. The NRCS is supposed to inspect and approve the testing bodies each producer and importer uses for every 500t of cement.
Lucky Cement has been a regular importer of cement to South Africa since 2009. It exports around 1.65Mt/yr to over 22 countries in South East Asia, the Middle East and Africa. CCI figures reckon that 140,000t of cement was imported to South Africa in the first quarter of 2012, mostly by Lucky Cement. According to the Global Cement Directory 2012 South Africa's capacity is around 11Mt/yr.
Four domestic producers – Lafarge, PPC, AfriSam and NPC – were accused of cartel activity by the South African Competition Commission, in a case that has been running since 2008. PPC confirmed the existence of the cartel, whilst Lafarge and AfriSam were fined US$19.6m and US$16m respectively.
By letting Lucky Cement resume the sale of its cement in South Africa, the NRCS has arguably done more than the Competition Commission to prevent cartel activity. With reports surfacing that other producers in Pakistan and India are considering exports to South Africa, domestic producers are going to have to become more inventive and more competitive.
India: Encouraged by the general response to its US1.1bn penalty imposed on 11 Indian cement companies for a price-fixing cartel, India's competition watchdog, the Competition Commission of India (CCI), has said that it will show leniency to those companies and individuals that provide information on cartels and anti-competitive agreements.
"It is the right time to reach out to people and encourage them to come out with information on more cartels," said CCI Chairman Ashok Chawla. Chawla said that the Competition Act provides for 'leniency programmes' for those who help the CCI tackle the 'pernicious practise of cartelisation,' and pointed out that the facility had not yet been used.