Lafarge Industries South Africa (Pty) Ltd., a wholly owned subsidiary of French cement maker Lafarge, will pay a $19.5-million penalty after admitting to charges of price fixing and market manipulation in southern Africa.
South Africa's Competition Commission said Lafarge has owned up to its participation in a cement cartel in southern Africa and agreed to pay the penalty, which represents 6% of its 2010 business revenue in the five countries that form the Southern African Customs Union: South Africa, Botswana, Lesotho, Swaziland and Namibia.
"This agreement follows the Commission’s investigation of price fixing and market division against the four main cement producers: Pretoria Portland Cement Company Limited (PPC), Lafarge, AfriSam (South Africa) and Natal Portland Cement Cimpor (NPC-Cimpor)," according to the Competition Commission.
In addition, the commission says Lafarge admits to having colluded with PPC and Afrisam to divide the region’s cement market "through allocation of market shares and indirectly [fixing] the price of cement."
The probe into the cartel activities was launched in mid-2008; the commission raided the offices of the four cement makers a year later. According to the commission says, “[PPC] applied for leniency and confirmed the existence of a cartel among the four cement producers.”
Last December, Afrisam admitted to the price-fixing and market-allocation charges and offered to pay a penalty of $16.4 million, equivalent to 3% of its 2010 annual cement revenue in South Africa, Botswana, Lesotho, Swaziland and Namibia.
"The four cement producers agreed to divide the cement market amongst them by allocating each producer the market share that it held prior to 1996, when a lawful cement cartel existed,” the commission says.
Lafarge and the cement manufacturers held several meetings in and outside South Africa during which they firmed up their plan to collude to influence the region’s cement market. To help fix the prices of the construction material, the companies used aggregated information received from the Cement & Concrete Institute (C&CI) as a mechanism for maintaining their arrangement, according to the commission.
With the settlement, Lafarge has promised to refrain from engaging in cartel activities and develop and implement a compliance program for all its employees.
Lafarge Industries South Africa, formerly Blue Circle Ltd., manufactures and markets cement, ready-mix concrete, aggregates and gypsum products. The company has an estimated market share of 20% to 24% of southern Africa’s cement market, second to PPC’s 34% to 39% and Afrisam’s 30% to 33%.