By CHINOYI CHIPULU
The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has punished Cement companies for collusion and for forming a cartel.
The Board of Commissioners of the Competition and Consumer Protection has ordered cement companies to revert to old prices of $4.50 and $5.00 which is about K100.
It has also fined Lafarge PLC and Mpande Limestone 10% of their annual turnover of 2019 and of 2020.
The Board has however granted full leniency to Dangote Cement Zambia Ltd.
This is after the Board established that the cement companies had formed a cartel and were colluding and were further increasing wholesale prices of their products without reference to their production costs or inflation.
This is for price fixing and division of markets while it exercised full leniency on Dangote Cement Zambia Limited for having cooperated with the Commission during investigations.
The Board has further 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 for a period of one year from the date of receipt of the Board Decision pursuant to Section 59 (3) (b) of the Act.
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 after an exhaustive investigation in January 2020, following 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.
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 has also ordered the three Cement Companies to develop and implement compliance programmes in their respective firms within 90 days of receiving the Board Directive.
According to a statement issued by CCPC Senior Public Relations Officer Namukolo Kasumpa the board has furthermore, directed the companies 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 or participate in any anti-competitive conduct including the exchange of information.
Ms Kasumpa said the Board of Commissioners also dropped charges against Zambezi Portland
Cement Limited after it was established that they were not part of the cement cartel.
“The investigation which lasted for over one year 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,” read part of the statement.
She noted that 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.
She said the investigation established that company representatives from Mpande
Limestone, Dangote Cement and Lafarge 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 the three amounted to an agreement.
“The Board 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,” she noted.
Ms Kasumpa said the Board notes that infrastructure development is the backbone of social economic development and one of the Government’s key priority areas in the Seventh National Development Plan.
“The construction industry is very important for Zambia’s economic growth, infrastructural development and employment generation and the cement industry plays a vital part of this infrastructure development. The fixing of cement prices by the three companies and setting of trade conditions therefore undermined a competitive market and was detrimental to consumers,” she said.
She said while the Board takes cognisance of the role the three companies 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.
“Based on these facts, the Board decided to fine Lafarge Zambia Plc and Mpande Limestone Limited the maximum fine of 10% of their annual turnovers for the two years of 2019 and 2020 for price fixing and market sharing. It was noted that Dangote Cement Zambia Limited was granted leniency as they were the only Leniency applicant and assisted with investigations,” she said.
She noted that the Board has warned businesses that engage in Anti-competitive Business Practises to desist from such conduct.
She said Commission remains steadfast in its commitment to eliminate any anticompetitive trade practices, which impact negatively on Zambia’s quest to promote a competitive business environment and ensure that ordinary consumers are not exploited.