Divestments and fines for Brazilian cement cartel

By Fausto Oliveira07 April 2014

Brazil’s anti-trust regulator, Conselho Administrativo de Defesa Econômica (CADE) is to force the sale of 24% of the total installed capacity of the country’s four largest cement manufacturers and fine them a total of BRL 3.1 billion (US$ 1.4 billion) as punishment for cartel activities.

The four companies involved are Votorantim, InterCement (formed by the merger of Camargo Corrêa and Cimpor), Itabira and Holcim. Lafarge had previously settled with CADE by way of an agreement on divestments and a negotiated fine BRL 43 million (US$ 19 million).

Votorantim will be the most affected by the forced divestments. It will have to sell 35% of its production capacity, which CADE says is equivalent to some 15% of the Brazilian cement market. InterCement will have to sell 25% of its capacity, equivalent to 4 % of the market, Itabira sale of 22% of its assets is put at 3 % of the market and Holcim Brazil’s 22% divestment equates to 2 % of the market.

According to CADE, there has been a cement cartel active in Brazil for the last ten years, which has seen companies collude to fix prices and sales volumes, and create barriers to competition. The agency estimates this cost the economy BRL 14 billion (US$ 6.3 billion) in inflated prices and other effects.

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