Brazil fines six cement firms $1.4 b for price rigging

Monday, 9 June 2014 00:00 -     - {{hitsCtrl.values.hits}}

Reuters - Brazil’s antitrust watchdog Cade has fined six cement makers a combined 3.1 billion reais ($1.4 billion) for fixing prices for two decades and ordered the companies to dispose of many assets, in a ruling several of the firms said they would appeal against. Votorantim Cimentos SA, Camargo Correa SA’s Intercement Brasil, Itabira Agro Industrial SA and Cia de Cimentos Itambé SA, as well as Switzerland’s Holcim Ltd and Cimpor Cimentos de Portugal SGPS SA agreed to set prices to force rivals from the market, councilors at Cade said at a hearing that lasted for 10 hours. Cade did not accept the companies’ claims that there was no evidence of price-rigging and ordered them to cut installed capacity in concrete services by 20 percent in large markets. The ruling also requires the companies to do away with any cross shareholdings. The ruling, which followed an eight-year inquiry, came amid allegations of cost overruns that have dogged preparations for this year’s soccer World Cup, which Brazil is hosting and which begins in mid-June. Local cement sales have more than doubled and prices have jumped about two-thirds over the past decade following a commodities-based boom and government efforts to expand roads and other infrastructure. The six companies named in the ruling control about three-quarters of the domestic market for cement and concrete. “This cartel was so strong that it had clear strategic goals,” councilor Márcio de Oliveira Junior said. Groups in Brazil’s cement industry tend to have strong market control over specific regions, increasing the potential for collusion. The number of producers shrank to about 10 in 2011 from almost two dozen in the early 1990s. Government studies also showed evidence that takeovers and asset swaps between cement companies were made to prevent rivals from entering the lucrative industry.