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COMMISSION IMPOSES FINES ON A CEMENT PRODUCERS' CARTEL

European Commission - IP/94/1108   30/11/1994

Other available languages: FR DE DA ES NL IT PT EL

Acting on an  proposal from Mr Karel Van Miert, the Commission  Member with
special  responsibility  for  competition  policy,  the   Commission  today
decided to impose  fines on  the European  Cement Association  (Cembureau),
8 national  cement  associations  and  33 European  cement  producers   for
infringements of Article 85 of the  EC Treaty involving their participation
from 1983 in a general  market-sharing agreement, transnational restrictive
practices and  restrictive practices  relating to  exports (market  sharing
and exchanges of information).    The firms concerned are based  in all the
Member States  and  in some  of  the  EFTA  countries  (Norway, Sweden  and
Switzerland).  
The Commission  is requiring the  participants to put  an immediate end  to
the infringements.

The undertakings and  associations of undertakings  have to  pay the  fines
within  three months.   The  total (ECU 248 million)  is  the highest  ever
imposed (see attached details).

Mr Van Miert said  that the fine  was justified for  the following reasons:
the  infringement had gone on for a long  time (since 1983), the cartel was
large and  affected the  bulk of  European production,  the acts  committed
were serious  (market sharing and  exchange of information)  and the market
was a  substantial one  (some ECU 7 billion  annual turnover  in white  and
grey cement).

The producers  cannot deny that  they were  perfectly aware that  they were
engaging in unlawful  activities since, at a meeting of the European group,
the Chairman stated that "needless to say  there will be no minutes of this
meeting".

The producers consistently stressed the  specific nature of the  market for
their  products,  but  such  markets  are  interdependent  since  they  all
overlap, particularly in  the frontier regions.   Any action on  one market
can  spill over and ultimately spread to the most distant markets.   It was
thus  clearly in  order to  avoid this  knock-on effect that  the producers
formed  a  cartel.    Such  practices  are  prohibited  under  the  Treaty:
Community  law enforces  the  principle of  free  competition as  a natural
counterbalance  to  the  freedom which  entrepreneurs  enjoy  in  a  market
economy.   

Citing previous  decisions adopted this year  by the Commission (a  fine of
over ECU 100 million on  steel beam producers and a fine of ECU 132 million
on cartonboard producers), Mr Van Miert  made it clear that the  Commission
would take vigilant action  against any practices  that run counter to  the
spirit of the single market, whether  they affect consumers or the  economy
in general.

Although  it did not  detract from the seriousness  of the  conduct and the
nature of  the infringement, the  Commission did, in  determining the level
of the fines, take account of the fact that  Community firms had during the
relevant period been faced  with a sudden surge in cement imports just when
Community industry was having difficulty emerging from the recession.

THE RELEVANT MARKET

The Community is  the world's largest  cement producer,  with a  production
capacity  of   around  220 million tonnes.        Consumption  amounts   to
180 million tonnes,  and  overcapacity  in  the  industry  is  exported.   
Supply  is  concentrated,  with the  five  leading  European  cement groups
(Holderbank, Lafarge Coppée, Italcementi-Ciments français,  Blue Circle and
Heidelberger) being  also world  leaders and  currently controlling  almost
half of Community supply.

Supply  is   even  more   concentrated  at   national  level.     In   four
Member States, there  is  only  one  producer  left,  while  in  the  other
Member States two or three cement groups dominate the market.

Although cement works  are generally close  to their  raw material  sources
and  to  their   outlets,  since  the  materials  they  handle  are  heavy,
production costs may differ considerably from one  Member State to another.
 The Commission found  during its investigation that cement may be supplied
profitably  even over long distances.    Cement  supplies are possible from
Germany  and  Spain  to  the  United Kingdom  and  Ireland,  while  Italian
producers are  able to cross  the Alps and  supply cement in Switzerland.  
The relevant market is therefore Europe, made up  of an overlapping pattern
of interdependent markets.    If the  markets were sealed off  by distance,
there would be  no reason for  the behaviour of the  firms as described  in
the infringement.

THE FINDINGS

The cartel  was discovered  following lengthy  investigations and  surprise
inspections  carried  out  by Commission  officials  at  the  various  head
offices of the undertakings concerned.

RESTRICTIVE PRACTICES BETWEEN CEMBUREAU AND ITS MEMBERS

In  the  course  of  its  investigation,  the  Commission  found  that  the
producers  represented  within  the  European  organization Cembureau  were
engaging in  practices  designed to  "contribute  to the  establishment  of
healthy competition" and  "establish rules of the  game amongst  themselves
so as to avoid improper competition".

-   Cembureau  established what  was known as  the "Cembureau  agreement or
    principle  of  not  transhipping  to  internal  European  markets".    
    According  to  information  found   on  the  premises  of  the   cement
    producers,  this  principle  was  underpinned  by  concerted  practices
    involving the  exchange of  information on  prices.    The  aim was  to
    reduce price  differences between the various countries so as to remove
    any temptation  to export  and so  as to  get those  producers who  did
    export to  align  their prices  on those  of local  producers and  thus
    avoid disrupting the market in the importing country.

  At  a  Cembureau  meeting on  intra-Community  trade,  the  members  thus
  discussed  the rules of the  game which it was in  the interest of all of
  them to comply  with, and one of  the conclusions at another  meeting was
  that   "pressure  from  inter-member  trade  had  slackened  considerably
  through improved bilateral contacts.   Exports had tended to  shrink, but
  there was still a threat from outsiders".

-  Community producers agreed to share markets

.  Exchanges of  notes between  French and Italian  producers reveal  their
   decision  to   share  the  Côte d'azur market  (notification  of  prices
   charged,  refusal to  supply certain customers).   "A  war is pointless.
   Agreements must be concluded to avoid conflict".

.  At several meetings,  the Portuguese and Spanish producers,  represented
   by   their   associations,   monitored   cement  exports   between   the
   two countries so as  to ensure that markets  were shared.   "The parties
   present,  who may  be  regarded as  the  representatives of  Spanish and
   Portuguese  cement producers,  expressed  their  clear support  for  the
   principle  that  there should  be  no  cement  movements  from Spain  to
   Portugal or from Portugal to Spain".
   So  as to  achieve these ends,  the producers  exchanged information and
   refused to sell to certain customers.  
   An agreement similarly existed between certain French  and German firms,
   as a number  of documents  found by the  Commission on  the premises  of
   such firms demonstrate.  The  agreement was intended to  restrict French
   supplies to Germany  and German supplies to  France.   One memo  states:
   "We clearly expressed the opinion  that each party should  remain within
   its borders".

-  A coalition  of cement  producers (European  Task Force)  was formed  in
   1986 within  Cembureau to deal with the threat of low-price Greek cement
   exports  to  a  number  of  Member States  after  the  Greeks  had  lost
   important  markets in  the Middle East.   At a  series of  meetings, the
   representatives of  several producers devised  the "carrot" and  "stick"
   measures   required   to   prevent   Greek cement   exports   to   other
   Member States.

   At such  meetings (the  Commission has  several sets of  minutes in  its
   possession),  numerous items  of information  were exchanged.   A  joint
   trading  company  (Interciment) was  set up  to absorb  Greek cement and
   prevent it from being  exported to certain markets.   The Italian cement
   producers  took action  to have a  contract between  an Italian consumer
   and Greek suppliers broken.  European cement  producers concluded cement
   purchase contracts with Greek producers  in order to curb  Greek exports
   to Europe,  and they informed  one another of the  quantities which each
   had purchased and of the contracts concluded with Greek producers.

RESTRICTIVE PRACTICES RELATING TO GREY-CEMENT EXPORTS 

A  number  of   large  European   manufacturers  set  up   information  and
coordination bodies  such as  the European  Cement Export  Committee (ECEC)
and the European  Export Policy Committee (EPC), which had various aims and
activities:  they  monitored exports and export forecasts,  compared supply
and demand on home and export markets and exchanged information on prices.

The purpose  of these  bodies was  also to  enforce the  home market  rule:
their task was thus to channel production surpluses to third countries,  so
restricting the scope for members to sell within the Union.    They created
a  system  of  solidarity  and  monitoring  to  prevent  competitors   from
encroaching on home markets within the Union.

RESTRICTIVE PRACTICES RELATING TO WHITE-CEMENT EXPORTS 

White-cement  producers  entered   into  restrictive  practices   involving
non-transhipment  to  home  markets  and   the  channelling  of  production
surpluses to  third countries, exchanging  information on their  individual
production capacities, sales and prices. 

COMMISSION ASSESSMENT

It should be  recalled that Article 85(1)  of the  EC Treaty prohibits  all
agreements  between undertakings, decisions by associations of undertakings
and concerted practices which  may affect  trade between Member States  and
which  have  as their  object  or  effect  the  prevention, restriction  or
distortion  of competition  within  the common  market,  and in  particular
those which directly or  indirectly fix purchase or  selling prices or  any
other trading conditions,  limit or control production,  markets, technical
development, or investment, and share markets or sources of supply. 

.  In   1983   the   Cembureau   members   concluded    an   agreement   on
   non-transhipment  to home  markets and on  the regulation  of sales from
   one country  to another, this being  underpinned by  other agreements on
   the exchange of information, the practical  implementation of which  was
   entrusted to the parties concerned, through  numerous meetings, extracts
   of  whose minutes the Commission has possession of.  This is a concerted
   practice which has as  its object and effect the compartmentalization of
   national markets and which is expressly prohibited by Article 85.

   The Cembureau members regularly  exchanged information on prices.   This
   too  is  a practice  that infringes  Article 85,  since its  aim was  to
   ensure that  all producers would align their  prices on the local "price
   leader"  in the  event of cross-frontier  sales, thus  ensuring that the
   relevant supplies did not disrupt the level  of prices on the market  in
   another country.

.  The  single  and  continuous agreement  relating  to the  Cembureau Task
   Force  is  a clear  breach  of  Article 85  designed  to prevent  cement
   imports into the Community  from non-Community countries and to seal off
   national markets to the benefit of  local producers and the detriment of
   consumers.

.  The decision to set up  a joint trading company,  Interciment, similarly
   constitutes   an   agreement   between   undertakings,   prohibited   by
   Article 85. The  same applies to  the ECEC,  the EPC  and the  agreement
   between white-cement producers.

All   these  market-sharing  agreements   between  producers  in  different
Member States constitute  concerted practices that  have direct effects  on
trade between Member States and are accordingly contrary to Article 85.

THE DECISION

-  The 42  undertakings and  associations of undertakings  are required  to
   terminate the relevant practices immediately.

-  Fines are  imposed (see annex). They are payable  within three months of
   notification  of  the decision.  The  funds  will  be  allocated to  the
   Community budget.

The basic  levels of the fines imposed on the undertakings and associations
of undertakings  were set in  accordance with usual  practice, applying the
provisions laid  down under Community  law. Fines can  in theory amount  to
10% of a   company's total turnover,  but calculation is normally  based on
the Community  turnover in the product concerned.  The level of fines takes
account  of  the  seriousness  of  the  infringement  (market  sharing  and
exchanges of  information), its duration  (since 1983), the involvement  of
the undertakings or  associations of undertakings in each of the practices,
and market conditions.

The  fines   imposed  on  the   associations  are  flat   sums,  since  the
associations do not have any turnover.  The  fines are intended to dissuade
trade   associations  in  future  from   taking  any  such  initiatives  or
facilitating such restrictive practices.

Les associations et les producteurs sont:

Pour le ciment gris

Pays/Nom                                                  Amendes
                                                     (en mio Ecus)

        
Allemagne
1.  Bundesverband der Deutschen Zementindustrie             0,100
2.  Alsen-Breitenburg Zement und Kalkwerke GmbH             3,841
    (controlee par Holderbank Financiere Glarus AG)
3.  Dyckerhoff AG                                          12,296
4.  Heidelberger Zement AG                                 15,652
5.  Nordcement AG (controlee par Holderbank                 1,850
    Financiere Glarus AG)
6.  Cembureau - Association Europeenne du Ciment            0,100

Belgique
7.  Federation de l'Industrie Cimentiere                    0,100
8.  S.A. Cimenteries CBR (controlee depuis 1993             7,196
    par Heidelberger Zement AG)

Danemark
9.  Aalborg Portland A/S                                    4,008

Espagne
10. Oficemen - Agrupacion de Fabricantes de Cementos        0,070
    de Espana
11. Asland S.A. (appartenant depuis 1990 a Lafarge          5,337
    Coppee S.A.)
12. Hispacement S.A. (filiale commune entre Asland S.A.,    0,102
    Corporacion Uniland S.A., Cementos Molins S.A.,
    La Auxiliar de la Construccion S.A., Compania
    Catalana de Cementos Portland)
13. Hornos Ibericos Alba S.A. (controlee par                1,784
    Holderbank Financiere Glarus AG)
14. Corporacion Uniland S.A.                                1,971
15. Compania Valenciana de Cementos Portland S.A.           1,312
    (controlee depuis 1992 par le groupe mexicain CEMEX)
France
16. Syndicat Francais de l'Industrie Cimentiere             0,100
17. Cedest S.A. (qui appartenait au groupe Francais CGIP    2,522
    et qui a ete reprise en 1994 par Holderbank Financiere
    Glarus AG)
18. Societe des Ciments Francais S.A. (controlee depuis    24,716
    1992 par Italcementi S.p.A.)
19. Lafarge Coppee S.A.                                    22,872
20. Vicat S.A.                                              8,272

Grece
21. Association of the Greek Cement Industry                0,100
22. Halkis Cement Company S.A.                              1,856
23. Heracles General Cement Company (rachetee a l'Etat      5,748
    grec en 1992 par Calcestruzzi S.p.A. du groupe Ferruzzi)
24. Titan Cement Company S.A.                               5,625

Irlande
25. Irish Cement Ltd.                                       3,524

Italie
26. F.lli Buzzi S.p.A.                                      3,652
27. Cementir - Cementerie del Tirreno S.p.A. (appartenant   8,248
    jusqu'en 1992 au holding public IRI et vendue au groupe
    Calcestruzzi)
28. Italcementi S.p.A.                                     32,492
29. Unicem S.p.A. (controlee par le holding Agnelli IFI)   11,652

Luxembourg
30. S.A. des Ciments Luxembourgeois (groupe ARBED)          1,052

Norvege
31. Aker a.s.                                               0,040

Pays-Bas
32. Vereniging Nederlandse Cement - Industrie               0,100
33. ENCI - Eerste Nederlandse Cement - Industrie            7,316
    (controlee par S.A. Cimenteries CBR)

Portugal
34. ATIC - Associacao Tecnica da Industria do Cimento       0,070
35. Cimpor - Cimentos de Portugal S.A.                      9,324
36. Secil - Companhia Geral de Cal e Cimento S.A.           3,017

Royaume Uni
37. British Cement Association                              0,100
38. Blue Circle Industries PLC                             15,824
39. Castle Cement Ltd (controlee en commun depuis           7,964
    1987 par le groupe norvegien Aker a.s. et par le
    groupe suedois Euroc AB)
40. The Rugby Group PLC                                     5,144

Suede
41. Euroc AB                                                0,040
Suisse
42. Holderbank Financiere Glarus AG                         5,331

TOTAL                                                     242,420

Pour le ciment blanc

Allemagne
Dyckerhoff                  0,988

Belgique
CBR                         0,836

Espagne
Valenciana                  0,554

France 
Ciments francais            1,052
Lafarge                     1,028

Italie
Italcementi                 1,088

TOTAL                       5,546

* * *


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