Economy

2 CEMENT COMPANIES FINED FOR PRICE FIXING, DIVISION OF MARKETS AS DANGOTE ESCAPES PENALTY

Lusaka ~ Wed, 31 Mar 2021

By Brightwell Chabusha

The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has fined Lafarge Zambia Plc and Mpande Limestone Limited 10% of their annual turnovers for the year 2019 and another 10% of their 2020 annual turnovers for price fixing and division of markets.

The Board, however, was lenient with Dangote Cement Zambia Limited, for having cooperated with the Commission during investigations.

The decision to fine Lafarge Zambia Plc and Mpande Limestone Limited was made during the 49th Board of Commissioners Meeting for the Adjudication of Cases held in Lusaka on March 30, 2021.

This was after an exhaustive investigation by the Commission initiated in January 2020 following the Commission’s observations of a sustained increment of cement prices from an average of K55 to K100 per 50Kg bag between July 2019 and January 2020.

The continuous price increment of cement by the parties led the Commission to suspect that there was possible collusion and an agreement to fix the prices of cement and the Commission carried out investigations for a year.

In a statement issued by CCPC senior public relations officer Namukolo Kasumpa, the Board has also ordered Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone Limited to revert to the pre-cartel prices ranging between USD 4.50 – USD 5 (K99 – K110) for a period of one year from the date of receipt of the Board decision pursuant to Section 59 (3) (b) of the Act.

“Additionally, that Lafarge Zambia Plc, Dangote Cement Zambia Limited, Mpande Limestone Limited submit monthly average ex-works prices and any price adjustments be indexed to the exchange rate and be submitted to the Commission for review pursuant to Section 58 (1) of the Act,” the Board stated.

The Board has further ordered the three cement companies to develop and implement compliance programmes in their respective firms within 90 days of receiving the directive.

“Furthermore, the Board has directed Lafarge Zambia PLC, Dangote Cement Zambia Limited and Mpande Limestone to make undertakings within 90 days of receiving the directive that their respective employees should not engage in any anti-competitive behaviour and that the enterprises should not facilitate and/or participate in any anti-competitive conduct including the exchange of information,” the Board stated.

And the Board has dropped charges against Zambezi Portland Cement Limited after it was established that they were not part of the cement cartel.

Meanwhile, the Commission’s investigations revealed that the parties shared price adjustment proposals seeking approval for price changes before the implementation date and in some cases before they were approved by their respective management.

“The exchange of commercially sensitive information on future prices and rebates demonstrated that there was a ‘meeting of minds’ among the Respondents to pursue an agreed objective,” the Board stated. “The investigation established that company representatives from Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc held discussions and meetings which resulted in the development of a pricing philosophy to stop cement price reductions. The investigations also established that the Cement Companies had agreed on a flat rebate of ZMW3 sometime in December 2019.”

The Board determined that the sharing or exchange of commercially sensitive information relating to future prices and rebates by Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc amounted to an agreement.

“The Board of Commissioners further determined that this agreement was anti-competitive as it was used to fix the price of cement and share markets contrary to Section 9(1) (a) and (b) of the Act respectively,” the Board stated.

They added that the fixing of cement prices by the three companies and setting of trade conditions therefore, undermined a competitive market and was detrimental to consumers.

“While the Board of Commissioners takes cognisance of the role Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc, play in the economy in general and their contribution to employment creation, their conduct had the serious effect of undermining infrastructure development both private and public especially with Government’s continued thrust on infrastructure development projects from roads, schools, clinics and development of district centres among others,” stated the Board.

2 Comments

  1. Razor

    This will just create an artificial shortage as they will limit production of the same thereby giving rise to black market dealers.

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