According to Reuters, a push by Brazil’s antitrust watchdog Cade to impose unprecedented sanctions against six cement makers accused of colluding to exclude rivals from the market will likely end up in a years-long court battle.

Cade board member Alessandro Octaviani proposed to fine the firms – “the cement cartel” as the watchdog has dubbed them – a combined $1.3 billion and force them to dispose of assets, in what would be a landmark decision if a majority of the watchdog’s board agrees.

“There is plenty of evidence that the cement and concrete cartel subjugated the Brazilian economy for decades,” Octaviani told fellow Cade members at a hearing, which lasted for over ten hours.

Holcim Ltd., Cimpor Cimentos de Portugal SGPS SA, Votorantim Cimentos SA, Camargo Correa SA, Itabira Agro Industrial SA, and Cia de Cimentos Itambé SA agreed to fix prices to assert their market dominance, Octaviani said. However, the companies, which together dominate almost 90 percent of Brazil’s cement and concrete market, are expected to fight back. Pedro Galdi, an analyst with SLW Corretora, said that the companies will do the utmost to keep their assets. “I don't see them putting their assets on the block for peanuts,” he said.

A lawyer in the case said courts could considerably ease the sanctions – a reason why Octaviani was aiming high with the fine and asset disposal proposals. “It’s a decision previously unseen in several aspects: the value of the fines and (the condition) that assets be sold. This is unheard of, that you order asset sales in a cartel decision,” a second lawyer with direct involvement of the case said on condition of anonymity.

The proposal, which followed an eight-year inquiry, comes as allegations of cost overruns hamper infrastructure projects across the country. The cost overruns are blamed, in part on a rise in cement prices by around two-thirds in the past decade. Sales more than doubled during the period in the wake of a commodities-based boom and government efforts to trim a housing deficit and expand the country’s roads, ports and other infrastructure. Octaviani claims that customers overpaid by around $11.55 billion over two decades as a result of the cartel’s existence.

In what was seen as the most severe aspect of his proposal, Octaviani urged Cade to order the companies to trim their installed capacity by between 22 percent and 35 percent. If Cade endorses Octaviani's proposal, Votorantim would have to pay a fine of around $619 million and dispose of 35 percent of its factory capacity. Intercement Brasil, Camargo Correa’s cement unit and which also owns Cimpor, could pay around $181 million and shed 25 percent of capacity. For Holcim and Itabira, a ruling would force them to shed 22 percent of their capacity each. Octaviani wants to fine Holcim around $210 million.

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