Probe warranted if cement makers have pact to raise prices

PETALING JAYA: The price hikes by cement manufacturers do not, at
this juncture, warrant an investigation by the Malaysian Competition
Commission (MyCC), unlike the situation with the Cameron Highlands
Floriculturist Association (CHFA), according to MyCC chief executive officer Shila Dorai Raj.
“Price
increases are by themselves not anti-competitive in nature. However, if
there is evidence of collusion among the competitors to increase
prices, this would be of concern to MyCC and may merit an investigation.
“In
the case of CHFA, it had publicly declared its intention to raise
prices by 10% in a news article in March whereas for the cement
industry the announcement that came from the manufacturer was made
unilaterally but seemed to be followed suit by other manufacturers,”
she told StarBiz.
The commission has yet to receive any formal complaint on the higher prices charged by cement producers.
StarBiz
reported yesterday that all cement manufacturers had decided to raise
prices of the building material following an earlier move by the
country's largest producer, Lafarge Malayan Cement Bhd.
This was widely expected by industry players after Lafarge hiked up its prices by 6% on Wednesday.
There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd. Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.
When contacted, MBAM secretary-general Chuan Yeong Ming
said if the industry body received any evidence of collusion among
cement makers, it would be brought to the attention of the MyCC.
The
Cement and Concrete Association of Malaysia, the industry body that
represents the interests of the cement industry, said on Wednesday it
was not in any way involved in the setting of prices by its members as
that would count as an infringement of competition laws. It was earlier
reported that MyCC had made a “proposed decision” on CHFA, which was a
notice to the affected party listing out the facts and penalties that
could be imposed.
A proposed decision is final unless refuted by the affected party.
Under
the Competition Act 2010, it is a violation when enterprises in the
same level of production or supply chain agree to fix the price of
their goods or services.
Tasek shares finished three sen, or 0.3%, higher to RM9.87, gaining 30.5% for the year.
Lafarge,
meanwhile, was up 33 sen, or 4%, to RM8.50 yesterday and 21.8%
year-to-date on the back of upgrades from three research firms this
week.
Hwang DBS Vickers Research
yesterday upgraded the stock to “hold” from “fully valued”, saying
cement players were poised to ride on Malaysia's infrastructure boom
and the existing oligopoly market structure.
It added Lafarge
has a controlling 40% market share and the largest spare capacity among
its peers, with 30% of production for export.
“The cement price
hike is a positive note for Lafarge as the previous hike in May 2011
did not fully compensate for the increase in energy and fuel costs, due
to Tenaga Nasional Bhd's
7% average electricity tariff hike and removal of diesel fuel subsidies
which increased diesel prices by 22% or 32 sen per litre,” the
brokerage said.