UPDATE 1-Brazil fines cement firms $1.4 bln for price rigging, orders asset sales

miércoles 28 de mayo de 2014 21:31 GYT
 

(Adds comments from companies, councilor, background)

By Leonardo Goy and Guillermo Parra-Bernal

BRASILIA/SAO PAULO May 28 (Reuters) - Brazil's antitrust watchdog Cade fined six cement makers a combined 3.1 billion reais ($1.4 billion) for fixing prices for two decades and ordered the companies to dispose of many assets, in a harsh decision that the biggest one said it will challenge in courts.

Votorantim Cimentos SA, Camargo Correa SA's Intercement Brasil, Itabira Agro Industrial SA and Cia de Cimentos Itambé SA, as well as Switzerland's Holcim Ltd and Cimpor Cimentos de Portugal SGPS SA agreed to set prices to force rivals from the market, councilors at Cade said at a hearing that lasted for 10 hours.

Cade ignored the companies' claims that there was no evidence of price-rigging and ordered them to cut installed capacity in concrete-services by 20 percent in large markets. The ruling also requires the companies to do away with any cross shareholdings.

The ruling, which followed an eight-year inquiry, came as allegations of cost overruns have dogged preparations for this year's soccer World Cup. Local cement sales have more than doubled over the past decade and prices have jumped about two-thirds in that period following a commodities-based boom and government efforts to expand roads and other infrastructure.

"This cartel was so strong that it had clear strategic goals," councilor Márcio de Oliveira Junior said. The six companies named in the ruling control about three-fourths of the domestic market for cement and concrete.

Wednesday's decision was slightly milder than councilor Alessandro Octaviani's January proposal, which called for bigger asset disposals. 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.

Lawyers said litigation could go on for years should the companies appeal. Cade had previously blocked any attempt for early settlements.   Continuación...