House opens probe on cement ‘cartel’

House opens probe on cement ‘cartel’
Published: 17 November 2008

Noting an urgent need to come up with a strong competition policy or anti-trust law, the House committee on trade and industry in teh Philippines will start hearing today on the issue of cement cartel operations by the three major foreign cement firms operating the country.

The committee headed by Rep. Junie Cua will particularly look into four House Resolutions urging the committee to conduct an investigation on the reported overpricing of cement by the cement manufacturers and four pending bills seeking to implement measures and penalize unfair trade practices in the country.

The country has no comprehensive anti-trust or competition law except on anti-profiteering and the Price Tag Law, which are deemed insufficient to pursue and persecute perpetuators of unfair trade practices.

House Resolution No. 71 by Rep. Aurelio D. Gonzales Jr. has directed the committees on trade and industry and on housing and urban development to conduct an inquiry in aid and or legislation into the reported cement overpricing of factory prices of cement by cement manufacturers to the detriment of the cement retailers, the construction sector and the consuming general public.

House Resolution No. 128 was filed by Rep. Pedro Romualdo also urged the committee to conduct an inquiry in aid of legislation into the high prices of cement in the country brought about alleged existence of a cartel which has adversely affected the economic growth of the country.

Rep. Arthur Y. Pingoy has also filed House Resolution No. 158 but which not only directed the committee to probe on the overpricing of cement by local cement manufacturers but also asked the committee to lay the foundation for the importation of cement to temper the high cost of cement and to deal with the projected cement shortage after 2010.

Likewise, House Resolution No. 625 has directed the committee to investigate in aid of legislation the surge in cement prices.

The probe into the cartel operation is also timely following the recent move of the European Commission to raid the three big cement firms Lafarge of France, the world’s biggest cement maker, Holcim of Switzerland, the second biggest, and Cemex of Mexico.

According to the Commission, they have reason to believe that the companies concerned may have violated EC Treaty anti-trust rules that prohibit cartels and restrictive business practices and or abuse of a dominant market position.

For Cemex, which now has large operations in Spain, Britain, Germany and Eastern Europe, the investigation adds to a welter of bad news this year.

The company, long an investor favourite for its rapid global growth, is dealing with slumping volumes in its US and European markets, US$16.4bn in debt, and a share price that has fallen 60 per cent this year. In August this year, the Valenzuelan government seized Cemex’s assets in that country and rejected the company’s call for US$1.3bn in compensation.