Brazil sees signs of collusion in cement market

Six Brazilian cement makers colluded to fix prices, hampering competition in the midst of a construction boom, Brazil’s justice ministry said.

Switzerland’s Holcim, Portugal’s Cimpor and local producers Votorantim Cimentos, Camargo Correa, Itabira Agro Industrial and Cia. de Cimentos Itambe set prices among themselves to force smaller rivals from the market, the ministry’s economic-law secretariat said in a report.

SDE, as the Brasilia-based agency is known, will submit its report to Cade, the nation’s antitrust regulator, recommending that the companies be fined and condemned for anti-competitive practices. Consumers overpaid 1.5 billion reais ($850 million) for cement they bought last year, the report said.

“These companies made accords to fix prices, raise them too; divide market share; coordinate their market actions in both the cement and concrete sectors,” secretariat head Vinicius de Carvalho told reporters in Brasilia on Nov. 10.

The report, following a five-year inquiry, comes as allegations of corruption and cost overruns dog preparations for the 2012 soccer World Cup and 2016 Rio de Janeiro Olympics.

Cement sales in Brazil soared by about a third in the past two years due to a commodities-based economic surge and the government’s efforts to reduce a housing deficit and expand the country’s roads, ports and other infrastructure.

Brazil is the world’s fifth-biggest producer of cement, trailing China, India, the United States and Turkey. Sales of cement reached 15 billion reais in 2010.

The structure of Brazil’s cement industry is largely uneven, with groups having strong market control over specific regions, which increases the potential for collusion.

The number of producers has shrunk dramatically from 19 in the early 1990s to about 10 in 2010.