CAIRO: The Antitrust and Competition Protection Commission s (ACPC) reported nine cement companies to the public prosecutor on charges of conspiring to raise cement prices and for following anti-competitive practices, causing a stir in the industry and the media.
The ACPC received on July 16 a request from Minister of Trade and Industry Rachid Mohamed Rachid to study and submit a comprehensive report on the cement market. After extensive research, the authority concurred that some companies followed anti-competitive practices, leading to an increase in the commodity’s price.
Based on these findings, Rachid took the decision on Thursday to report nine cement companies to the public prosecutor on charges of violating Law No. 3 of the Customer Protection and Anti-Monopoly Act passed in 2005.
“Reporting nine companies is evidence that the authority plays an important role in regulating market standards, said Mona Yassin, head of the ACPC.
“The issue is with the public prosecutor now and we are closely monitoring their results, we have submitted concrete proof that there were monopoly conspiracies that negatively affected the market, Yassin said.
Cement prices rose from LE 370 to LE 450 per ton last month.
Rising local cement prices prompted the Trade and Industry Ministry to introduce an export duty of LE 65 per ton on cement in February. It raised this duty to LE 85 a ton in August.
While most analysts said the action taken against these companies proves that the ministry and authority care for the well-being of the market and consumers, others were skeptical of what the final verdict and penalties would be.
“I salute the decision, especially given that the customer protection law was passed three years ago. However, these cases usually take years to resolve and nothing concrete is ever reached, said Ali Moussa, the president of the General Division for Building Materials at the Chambers of Commerce and Industries.
While Rachid’s decision was seen as a bold move, the international cement companies being investigated are expected to hire international lawyers that will either extend the investigation period or clear their clients of all charges.
“The results of this investigation are unpredictable, Moussa said.
“It is true that the cement prices have been fluctuating and we are negatively affected by them. We just hope that this investigation results in strict rules for the future and that prices do not increase during the Eid period, Ali Khaled, a contractor said.
This investigation comes at the heels of the ministry’s announcement that 24 companies were found eligible to proceed to the next level in a bid for 17 new cement licenses.
The 24 companies – chosen from a total of 27 – passed the technical and financial phase. In the next tender – due to take place on Oct. 24 – six of these companies will compete for two expansion licenses of their existing facilities, 11 companies will compete for licenses to build eight new cement facilities and two companies will be granted licenses to produce white cement.
Five companies have been granted new licenses without going through the tender process and have started building their facilities, but will have to pay the same price the tender settles on.
“The tender will be conducted according to strict rules, and every company has to submit a letter of guarantee worth LE 100 million before Oct. 25, or else they will be considered ineligible, said Amr Assal, head of the Egypt’s Industrial Development Authority, in a press conference Thursday.
The increase in the number of cement companies is expected to stabilize cement prices in the market, as supply levels with demand.
The new companies will also contribute to creating more job opportunities in Upper Egypt governorates, with most of the new facilities being established in Beni Suef, Aswan and Minya.
“There should be less monopoly in the market as well as an increase in production and competition, which will all contribute to stabilizing the market and cement prices domestically, Rachid said.
The new companies are expected to produce 19-20 million tons of cement annually within the next five years.
