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PPC confession does not sway 3 major cement makers
November 12, 2009
By Roy Cokayne
PPC’s singing like a canary before the Competition Commission is not swaying the other three cement producers to confess to collaboration in anti-competitive practices.
Lafarge, AfriSam and NPC-Cimpor who together with PPC dominate the cement market have maintained their silence and innocence even after the commission granted PPC leniency on condition it “told all” about industry collusion.
The commission on Wednesday confirmed it had granted PPC conditional leniency from prosecution under the Competition Act in exchange for the company’s complete and truthful disclosure of “all cartel activities between PPC and its competitors”.
PPC applied for leniency shortly after the commission raided and seized documents and electronic data from the premises of the four producers on June 24 this year as part of its investigation into possible collusion in the cement industry.
Charles Naudč, chief executive of AfriSam, said yesterday (thurs) it had initiated an intensive internal investigation following the commission’s raid in June to ensure it had been and continued to adhere to competition law but to date this investigation had not revealed “any inappropriate activities”.
The commission said that in its application for leniency, PPC confirmed the existence of a cartel to divide markets among the four cement producers to maintain the market shares that each producer held prior to 1996 when a lawful cement cartel existed and was regulated by exemptions to the competition legislation.
It said the agreement was implemented up until this year through highly disaggregated sales information each producer submitted to the Cement and Concrete Institute of South Africa (C&CI) through an audit firm appointed by C&CI.
In addition, the commission said there was an agreement that PPC would not compete in the Northern Natal market in exchange for Lafarge not competing with PPC in the Botswana market.
By dividing markets between themselves, competitors successfully shield themselves from competition and can price above competitive levels with no opposition or alternative from a competitor.
Terry Legrand, chief executive of Lafarge SA, said on Wednesday the company was “extremely surprised by the allegations”.
Legrand said Lafarge had a strong “complaints programme” and any breach of it resulted in disciplinary action but it was not aware of “any misconduct with any cement producer”.
Piet Strauss, managing director of NPC-Cimpor, said yesterday (thurs) said it provided its gross sales tonnages to the C&CI by delivering that information to independent auditors on a confidential basis, which was consolidated by the auditors with similar information provided by other cement producers.
Strauss said the consolidated information was published by C&CI and used widely for statistical and economic analysis purposes.
“NPC does not provide this information to C&CI for the purposes of market division. Cimpor and NPC have, and will continue, to cooperate with the Competition Commission in its investigation,” he said.
By dividing markets between themselves, competitors successfully shield themselves from competition and can price above competitive levels with no opposition or alternative from a competitor.
Bryan Perrie, managing director of the C&CI, said yesterday (thurs) the institute had never been involved in or aware of any anti-competitive behaviour, either in its professional capacity or on behalf of any of its cement producing members.
Perrie said the C&CI is a marketing organisation with a mission to grow the market for concrete for its members and the monthly cementitious sales volumes submitted by the producers served as a national and provincial economic barometer and available publicly.
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