PPC admits to involvement in cement cartel

11 November 2009 - 13:04
By Sapa

Pretoria Portland Cement (PPC) has confessed to being part of a cement cartel, according to the Competition Commission.

The commission granted PPC conditional leniency from prosecution under the Competition Act, in exchange for PPC'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 cement manufacturer's premises and those of its competitors -- Lafarge Industries South Africa, AfriSam Consortium, and Natal Portland Cement Cimpor, on June 24.

"The raids were in pursuance of the commission's investigation of possible collusion in the cement industry."

In its application for leniency PPC confirmed the existence of a cartel to divide markets among the four cement producers, the commission said in a statement.

According to this information, the four cement producers agreed to divide the market amongst themselves to maintain the market share levels each producer held prior to 1996, when a lawful cement cartel existed and was regulated by exemptions to the competition legislation.

"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 through an audit firm appointed by CCI.

"The four cement producers are the main members of CCI," the commission said.

In addition, there was an agreement that PPC would not compete in the Northern Natal market in exchange for Lafarge not competing with PPC in Botswana.

"In terms of the agreement reached PPC must also stop its involvement in cartel activity and refrain from submitting competition sensitive information to the CCI.

"The problem with competitors dividing markets between themselves is that they successfully shield themselves from competition and can thus price above competitive levels with no opposition or alternative from a competitor.