El Salvador anti-trust authority starts investigation into cement sector

El Salvador anti-trust authority starts investigation into cement sector
22 June 2018

The Salvadoran anti-trust authority (SC) has started a study that will evaluate the presence of a quasi-monopoly in the production and sale of cement in El Salvador and how it impacts the construction market.

The "Competence in the provision of goods and services for construction: cement, asphalt inputs and heavy machinery" investigation, will be carried out by the consulting company of Argentine origin GPR Economy, and will seek to characterise the economic chain of the domestic construction industry, being the first academic approach on the subject in the country, according to El Mundo.

Jaime Baires, coordinator of economic studies of the SC, said that "there is a quasi-monopolistic structure in the market and we have to study the elements that cause this structure to remain with only one company operating".

However, the existence of a monopoly in the market is not punishable by the Competition Law, according to Marlene Tobar, economic intendent of the SC. “This concentration,” she added, "does not mean per se that something happens there (negative)", since market conditions could influence the existence of a single operator.

Carlos Romero, expert responsible for directing the consultancy, explained that cement production "operates under monopolistic or oligopolistic conditions in many countries," due to its technical characteristics, such as the presence of a single quarry, or the size of the market. "The hypothesis that draws our attention to this monopoly are the conditions of foreign trade," added Romero, who affirms that short distances in Central America could be an incentive for the entry of new competitors from neighbouring countries.

Published under Cement News

Tagged Under: El Salvador anti-competition