Competition Council issues highest ever fine to cement producers

The Competition Council yesterday announced its decision to issue a 28.5 million-euro fine to the three cement producers in Romania: Lafarge Romcim, Holcim and Carpatcement.

This is the most drastic measure of its kind ever taken by the local competition authority to penalise “concerted practices to set cement prices together.”

These harsh accusations quickly elicited a response, with Lafarge Romcim Romania officials dismissing the allegations and announcing their intention to involve the Romanian courts and take the matter to the European Commission.

“After a very careful and thorough analysis of the cement market and the activity of the three producers, which took more than four years, the team of investigators has proven that Lafarge, Holcim and Carpatcement acted in concert from between 2000 and 2004 in order to establish a cartel to fix and impose cement prices on the Romanian market,” said officials from the Competition Council after completing one of the most extensive investigations ever conducted in Romania.

The Competition Council has fined Lafarge Romcim around 10.4 million euros (377.2bn ROL), the equivalent of 6.5% of the company”s turnover in 2004; Carpatcement has received a fine of 8.6 million euros (313.2bn ROL), 6% of its turnover in 2004; while Holcim has been fined 8 million euros (290bn ROL), 5.5% of its 2004 turnover, as well as an additional fine of around 1.4 million euros for failing to meet the requirements regarding their economic concentration at the Alesd-based factory (Bihor County).

“We hope this decision will mark the end of the illegal behaviour, and the companies now have the chance to prove they are going to compete fairly. Establishing a model to be followed – this is what the competition authorities and public opinion in Romania now expects from the management. After all, ethics are made by people,” said Mihai Berinde, the chairman of the Competition Council.

Officials from Lafarge, which so far has invested more than 300 million euros in Romania, said: “Lafarge Romcim believes this decision is based on unfounded allegations that disregard the arguments, facts and figures supplied to the investigators from the Competition Council. As a result, Lafarge Romcim strongly rejects the accusations made against it. Lafarge Romcim has decided to put this matter to the decision of the competent court in Romania and to bring it to the attention of the European Commission.”

For their part, Carpatcement officials said they had strictly observed the law since entering Romania in 1998.

“We are surprised by the decision of the Competition Council about the existence of an alleged cartel on the Romanian cement market. We believe the decision by the Competition Council is not in keeping with the community legislation and practice, which affects its credibility as an institution supposed to act within the law to guarantee a normal competitive climate. We most definitely reject the conclusions of the Council and will maintain our view before the competition court, under law, as we are convinced it will establish the truth,” said representatives for one of the largest German investors on the market.

Officials from the Swiss group said that “although the reasons that led to the issuing of the fine can be challenged both economically and legally, Holcim Romania will not challenge the decision of the Competition Council.” adrian.mirsanu@zf.ro