CAIRO: The trial of 20 Egyptian cement company executives on price-fixing charges began Monday, but adjourned until March 10 after a brief procedural session.
This is the first case of its kind under Egypt’s anti-monopoly law.
“It is usual that [such a case] takes a long time before the court . until inquiry is [complete], said Omar Mohanna, chairman of Suez Cement, one of the companies facing charges of monopolistic practices.
The 20 company executives did not appear in court, with their defense lawyers reportedly saying that the 2005 Consumer Protection and Anti-Monopoly Law was not constitutional and that article 22 of the law stipulates fines if producers are found guilty rather than confiscation of products. In addition to Seuz Cement, other firms include Misr Beni Suef, Misr Qena, Torah Cement, Al-Amiriya Cement. If found guilty, companies will pay fines ranging from LE 30,000 to LE 10 million, with recent news reports expecting even higher fines.
“I have nothing to say other than we [cement producers] believe in Egypt’s fair and righteous justice system, Mohanna said. He refused to comment any further.
The government – represented by the Ministry of Trade and Industry – filed complaints of anti-competitive practices against local cement producers in October after a 14-month probe by the ministry’s Antitrust and Competition Protection Commission (ACPC).
The ACPC reported existence of a cartel among cement companies that monopolized the market, conspired to raise prices, and at times restricted production of the commodity. It said local cement producers agreed on prices and how to share the market for Portland cement in 2005 and 2006.
Spiraling cement prices have triggered a public outcry in recent months, with experts saying that producers gratuitously doubled prices on the market. Rising local cement prices drove the ministry to introduce last February an export duty on cement at LE 65 per ton that rose to LE 85 a ton in August, in an effort to increase domestic supply and push down local prices.
Still, cement prices continued to soar, reaching LE 410-420 per ton last September, with expectations they would reach LE 550 per ton early this year. Local producers justified price upsurges as a result of supply-demand mechanisms.
Following the ACPC’s investigations, the general prosecutor’s statement, released in January, said the price of cement reached LE 400 per metric ton, which is 30 percent more than two years ago. The price was LE 300 per metric ton in 2006 and LE 345 per metric ton in 2007.
Meanwhile, the three-year-old anti-monopoly commission is now investigating the Egyptian steel sector, which is dominated by the Ezz Group of senior ruling party official Ahmed Ezz.
Prices of steel have been soaring to unprecedented highs since January. Market heavyweight El-Ezz Steel Rebars – which holds around 65 percent market share -abruptly increased this month steel prices an extra LE 370 per ton to bring wholesale steel prices to LE 4,170 per ton and consumer prices to LE 4,800 per ton. This is the company’s third price increase since the beginning of the year.
Findings of investigations in the steel sector were due last December, but have been delayed since then. Fingers pointed to Ahmed Ezz, accusing him of using his political ties to close the current investigation.
“Delay in steel investigation is not due to anything other than we are not done with our research yet. We do not want to release any inaccurate information in order not to wrongfully accuse anyone, said Ibrahim Abdel Reheem, head of media relations at the ACPC.
“Research and investigations in such a case take a long time. However, we are currently finalizing our inquiries. If you look at investigations in construction sectors carried out in other countries, they usually last two to three, and sometimes [even] five years.
He added that the cement investigation was completed in a record time (14 months) amid strong pressure from the press and public opinion.
On Monday shares in Suez Cement were 2.2 percent up at LE 59, while Misr Beni Suef inched 0.2 up to LE 116 and Misr Qena rose 0.8 percent.
On Tuesday (following the trial) shares in cement companies witnessed mixed performance. Shares in Misr Beni Suef jumped 4.71 percent to LE 121.9, while Suez Cement climbed 0.44 percent at LE 59.03. However, Al-Amiriya Cement and Misr Cement Qena closed in the red, falling 1.75 percent (at LE 29.23) and 0.71 percent (at LE 76.50), respectively.
