Colombian Regulator Fines Cement Companies Argos, Cemex, and Holcim $68 Million USD for Price-Fixing
Last week, Colombia’s industrial regulator levied combined fines of around $68 million USD (200 billion pesos) for alleged price-fixing against the top three cement companies operating in the country and executives working for the firms.
For illicit price-fixing on Portland “Type 1” cement, the Superintendence of Industry and Commerce (Superindustria) hit Cementos Argos S.A. and Cemex Colombia S.A. each with fines of more than $25 million USD (73.8 billion pesos) and Holcim (Colombia) S.A. with a fine of more than $18 million USD (54 billion pesos).
The three companies, according to the agency, make up some 96% of the Colombian cement market and allegedly flouted the law with their pricing practices during an investigation period that covered a three-year period from the start of 2010 through the end of 2012.
Superindustria found what it called a “price parallelism” among the offerings from the three firms during this time, something that it says Argos, Cemex, and Holcim could not justify with an “economically reasonable or truthful explanation.”
Along with sales of some 8 trillion pesos during these three years, Portland type 1 cement prices rose by 29.9%, according to the Superindustria investigation. This greatly exceeded the corresponding inflation rate of 9.3% and led to suspiciously high profit margins for the named firms.
The agency added that “the characteristics and structure of the cement market” in Colombia make this sector “highly prone to collusion” and cartel-like practices. It noted that “multiple investigations and sanctions” have resulted against cement companies for related practices in more than 30 countries, including the United Kingdom, Germany, Spain, India, Brazil, and Argentina. At least five investigations have been carried out against cement companies in Colombia since 1997, stated Superindustria.
The Bogotá-based authority also levied fines ranging from around $90,000 USD to $120,000 USD against the presidents of the three cement companies in Colombia: Jorge Mario Velásquez Jaramillo of Argos, Carlos Jacks Chavarría of Cemex, and Miguel Ángel Rubalcava Méndez of Holcim. Two other executives of Argos and one other executive of Holcim were hit with fines ranging from around $8,000 USD to $37,000 USD.
Both Argos and Holcim have issued statements denying any wrongdoing and said that they disagree with the findings of Superindustria. Cemex last week told Reuters that it was preparing a response to the Colombian regulator.
“The company delivered timely and conclusive evidence that these anti-competitive behaviors never existed,” said Holcim in a statement. “The company reiterates that it has not engaged in any corporate activity or practice that could be questioned from a legal or ethical point of view.”
This weekend, in an interview with Colombian newspaper El Tiempo, Argos President Jorge Mario Velásquez reiterated his companies position that the fines were issued by a governmental body that used improper methods and reached an incorrect conclusion.
“We are not defiant — we are respectful of the law and institutions,” Velásquez told El Tiempo. “But, at the same time, we are outraged by the injustice of this decision … We will use all the legal tools at our disposal in order to demonstrate our good actions.”
Photo: An Argos cement truck working in Bogotá, Colombia. (Photo credit: Jared Wade)