Russian antitrust body to consider Eurocement break-up

Russian antitrust body to consider Eurocement break-up
Published: 13 October 2005

Russia’ Federal Antimonopoly Service, or FAS, has ruled that Eurocement Group has been violating the law on competition and is considering forcing Eurocement Group to break up under antimonopoly regulations, the FAS said late Tuesday.  The company used its monopoly market position to set cement prices at excessive rates and failed to substantiate these prices, Kommersant business daily reported Wednesday quoting the FAS’ Deputy Director Andrei Tsiganov.  Tsiganov said the FAS had received complaints from construction companies, from Russia’ power grid monopoly UES and from the Moscow government. 

Tsiganov did not provide information on the losses suffered by consumers from Eurocement’ actions. He also did not specify the sum Eurocement would be required to pay back to the government.  But the FAS said Tuesday that it plans to recover the company’ profits resulting from the excessive prices. 

Eurocement Group which controls nine cement plants across Russia  is required to eliminate the violations by lowering their cement prices to fair competitive prices starting November 1, the FAS said.  However, Eurocement Group disagrees with the FAS decision, Eurocement’ Spokesman Sergei Meshchyarekov said quoted by Kommersant.  The current cement prices are justified in light of the price increases on oil and gas products and some raw material supplies, Meshchyarekov said. 

The company plans to appeal the FAS decision in court after it receives the FAS official notice within 10 days, Meshchyarekov said, adding that the company would not pay any money to the federal budget without a court ruling.  The FAS probe into Eurocement Group was initially prompted by requests from various construction companies in May. Eurocement Group’s clients said at that time the company announced it was raising prices for cement by 20 per cent, but then actually increased them by 50-70 per cent.