| Thu 25 Jun 2009, 11:40 | | THEE - Competition Commission raids premises of cement producers |
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JSE
THEE
THEE - Competition Commission raids premises of cement producers
PRESS STATEMENT
25 June 2009
Competition Commission raids premises of cement producers
On Wednesday 24 June 2009 the Competition Commission searched the offices of
Pretoria Portland Cement Company Limited `PPC`, Lafarge Industries South
Africa `Lafarge`, AfriSam Consortium (Pty) Ltd `AfriSam` (formerly Holcim
South Africa) and Natal Portland Cement Cimpor (Pty) Ltd `NPC-Cimpor`. The
search was conducted in 5 locations in Gauteng and KwaZulu-Natal
simultaneously.
Given the government`s substantial infrastructure investment and its broad
impact on the economy, the Commission has been researching the infrastructure
sector (one of its priority sectors) for two years and has identified a number
of products where there may be competition concerns, including cement. Despite
fluctuations in demand and input costs, the producer prices of cement in South
Africa have been increasing in tandem every six months (see chart below), at
levels far outstripping the producer price index (PPI), the leading indicator
of overall costs in the economy. The producers have implemented increases of
approximately 6% on average (12% per annum) and an even higher increase in
February 2009 in factory-gate, or producer prices.
The Commission believes that anti-competitive behaviour in this market could
be substantially increasing the cost of South Africa`s infrastructure
programme, with negative effects on the economy.
The search was part of the Commission`s investigation against the main cement
producers for price fixing and market allocation, controlling or limiting the
supply of cement extenders, and abuse of dominance by PPC aimed at foreclosing
independent cement blenders.
Cartel behaviour by these international companies raided yesterday is also
being investigated by competition authorities in Germany, the EU, Brazil and
Egypt.
Since the Commission began looking into infrastructure markets it has found
evidence of price-fixing, customer and market allocation as well as bid-
rigging in the sector. Of the applications for corporate leniency received by
the Commission in the previous financial year approximately 25% have come from
the construction industry generally.
"During the search we seized documentation and electronic data, which we will
now evaluate as part of our investigation. Should we find that the firms have
engaged in anticompetitive conduct, we will prosecute them for breaking the
law" says the Commissioner, Shan Ramburuth.
ENDS
Prepared by: FD Beachhead
Jennifer Cohen 011 214 2401/ 082 468 6469/ jennifer.cohen@fd.com
Dani Cohen 021 487 9021 / 082 897 0443 dani.cohen@fd.com
Senzi Dlamini 011 214 2420 / 073 494 0030 senzi.dlamini@fd.com
On behalf of: The Competition Commission
Further info:
Nandi Mokoena
Manager of Strategy and Stakeholder Relations, Competition Commission
012 394 3286 / 082 399 1328 / nandisilem@compcom.co.za
Keitumetse Letebele, HOD Communications
012 394 3183 / 082 783 3397 / keitumetsel@compcom.co.za
Note to editors:
In terms of section 46 of the Competition Act, the Commission is authorised to
enter and search premises and seize documents which have a bearing on an
investigation. Section 46(2) (b) of the Act authorizes a judge or magistrate
to issue the Commission with a warrant allowing them and accompanying police
officers to enter and search such premises.
Date: 25/06/2009 11:40:01 Produced by the JSE SENS Department.
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