Colombian Authorities investigate cartel

Colombian Authorities investigate cartel
Published: 13 January 2006

An increase of more than 50 per cent in cement prices in Colombia in recent months would appear to show that a very amicable ceasefire has been agreed to end the price war allegedly raging since last year, local press reported. The trade and industry regulator (SIC) has begun a preliminary investigation into whether an agreement has been struck between cement firms to raise prices, after they rose recently to over 12,000 pesos (US$5.30) a bag despite having spent much of 2005 hovering around the 7,000-peso mark. (reports Business News Americas

"The [SIC] is obliged to investigate if a cartel exists to fix prices, that is if there is a prior arrangement between cement firms to raise prices, bearing in mind that there are only four producers of this material," trade and industry regulator Jairo Rubio Escobar was quoted as saying by newspaper El Tiempo.

At the end of last year the regulator sent officials to the companies Argos, Holcim and Cemex, the three biggest players in the market, as well as to certain distributors to look into the prices being charged. The results of the probe will be available in February and based on these, the authorities will decide if there is reason to begin a formal investigation into the cement market.

Last year Cementos Andino complained to authorities that continual price reductions by competitors were aimed at eroding its income and forcing it to sell its assets to larger rivals, such as Cementos Argos, Cemex or Holcim,

The firm 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 to just 7000 pesos. A senate subcommittee was subsequently formed to deal with the issue and trade minister Jorge Botero sent a letter to Rubio calling for an enquiry into whether the low prices in the market were being set artificially or were the result of natural competition.

Nevertheless, in November Cemento Andinos was acquired by Cementos Argos in a US$192m deal including cement company Concrecem. Regulatory approval for the takeover is still pending, but if given, Argos would have a market share of as much as 59 per cent. The deal effectively marked the end of the friction between the companies and the case was considered closed.