KHL Group - International Construction

Pakistan launches cement cartel investigation

Written by Helen Wright - 31 Jan 2012 - View Chinese version

The Competition Commission of Pakistan (CCP) has raided the offices of the country's cement body, All Pakistan Cement Manufacturers Association (APCMA), to impound evidence of suspected cartel activity.

CCP said it was acting after obtaining copies of e-mails that were sent by the APCMA secretary to cement manufacturers which appeared to indicate that they had "collectively devised a vigilance plan by which the cement dispatches at one cement production unit are monitored by a team of another unit and vice versa".

This is not the first time that CCP has uncovered cartel activity in Pakistan's cement sector - in August 2009, it imposed a penalty of PKR 6.3 billion (US$ 70 million) on APCMA and its member companies for similar collusive behaviour, which violates the country's Competition Act.

CCP said the 2009 case had been taken to court and was still pending, and the fresh probe was based on a separate set of facts.

"The facts suggest that the cement manufacturers have again formed a collusive arrangement, and to ensure compliance the monitoring function is being performed by cement manufacturers themselves under the auspices of APCMA," the CCP claimed.

The CCP alleged that the secretary of APCMA appeared to be co-ordinating the activities under the arrangement, while the APCMA chairman was responsible for rotating the monitoring teams.

The CCP noted that the price of cement in Pakistan had soared over the last year, despite reductions in taxes and the global price of coal, which is used to heat clinker.