Brazil’s antitrust watchdog, Cade, has ordered six cement makers named in a price-rigging case to pay a combined 3.1 billion reais ($934 million) in fines within a month in a landmark decision that also orders asset disposals, reported Reuters.
Under the terms of the decision, Cade gave the companies a one-year deadline to reduce their installed capacity in the cement and concrete industries through asset sales. The decision was published in the government’s official gazette.
According to Cade, which first issued a ruling in the case in May 2014, Votorantim Cimentos SA, Camargo Correa SA’s Intercement Brasil unit, Itabira Agro Industrial SA and Cia de Cimentos Itambé SA, as well as Holcim Ltd. and Cimpor Cimentos de Portugal SGPS SA colluded on pricing to force rivals out of the market.
The ruling, which followed an eight-year inquiry, charts cost overruns that dogged Brazil’s preparations for last year’s soccer World Cup as well as dozens of road, port and infrastructure projects across Brazil. The producers named in the case control about three-quarters of the domestic market for cement and concrete.
A series of studies by Cade showed evidence that several takeovers and asset swaps among cement companies during the 1990s and the 2000s were made to prevent rivals from entering the lucrative market.
The largest players in Brazil’s cement industry tend to have strong market control in specific regions, increasing the potential for collusion. The number of cement producers in Brazil shrank to about 10 in 2011 from almost two dozen in the early 1990s.
Under terms of the ruling, Votorantim must pay 1.5 billion reais in fines and Cimpor 297 million reais. Cade fined Intercement Brasil 241 million reais, Itabira 411 million reais, and Holcim 508 million reais. Itambé must pay 88 million reais.
Cade also imposed sanctions on Abesc, an industry group representing concrete producers; ABCP, Brazil’s portland cement group; and SNIC, which represents local cement factories.