Colombia’s environment minister Juan Lozano has fired a warning shot across the bows of cement companies in the country, stating that prices could be subjected to government control, daily La República reported.
If there are increases in prices that are not in line with changes in the cost of other construction materials, the authorities will not hesitate to bring in administrative controls, the minister said.
"We don’t like the measure, but if there is too much speculative effort to make money, we would have to control the excesses by decree," Lozano was quoted as saying.
Cement companies in Colombia have been under official investigation by the trade and industry regulator (SIC) since early this year, but it is not the duty of that body to supervise or control prices, said regulator Jairo Rubio.
"The only power that SIC has is to investigate increases or decreases in prices that are not the result of market forces, but price agreements," Rubio was cited as saying.
The investigation was started after cement prices surged by around 50% towards the end of last year despite having been relatively stable for most of 2005. Investigators were sent to companies Argos, Holcim and Cemex (NYSE: CX), the three biggest players in the market, as well as to certain distributors to look into the prices being charged.
Prior to that the firm Cementos Andino complained that competitors were systematically reducing prices to force it to sell its assets to larger rivals. Andino eventually filed a complaint with the SIC pointing out that in just 12 months the price of a 50kg sack of cement had dropped from around 22,000 pesos (US$9.11 at the current rate) to just 7,000 pesos.
In January 2005 the SIC also opened investigations into price-fixing and other illegal practices, looking at cement firms Cemex Colombia, Holcim, Cementos Paz del Río, Compañía de Cementos Argos, Cementos del Caribe, Cementos Ríoclaro, Colclinker, Cementos de Caldas and Tolcemento.
In 1997 the regulator also carried out inquiries into the market practices of several cement companies after accusations were made of unfair competition.