Monopoly Watch warns possible cement cartel

A'an Suryana, The Jakarta Post, Jakarta

An antimonopoly group expressed concern on Tuesday that world giant cement makers, which have started to gain a foothold in local cement companies, could someday form a cartel in the domestic market at the expense of consumers.

In a media statement, Monopoly Watch also urged the Business Competition Supervisory Committee (KPPU) to launch an investigation to prevent this from happening.

A cartel is a grouping of businesses that agrees to influence prices by regulating the production and marketing of a product. One prominent example is the Organization of Petroleum Exporting Countries (OPEC), which often restricts oil output in a bid to prop up the price of the commodity.

Monopoly Watch feared that the increasing domination of foreign cement giants in local cement companies could lead to soaring prices of cement products in the domestic market as the main reason for multinational corporations (MNCs) to invest here was the huge potential profit they could make by boosting prices, which were still relatively lower compared with prices in neighboring countries.

According to data from the Indonesian Cement Association, the national cement industry is dominated by four major players, namely PT Semen Gresik group (including PT Semen Padang and PT Semen Tonasa), PT Semen Cibinong, PT Indocement Tunggal Prakarsa and PT Semen Andalas Indonesia.

Overall, the four companies account for 93 percent of national cement production.

World cement giants, including Holcim, Heidelberger and Lafarge, respectively control more than a 60 percent stake in Semen Cibinong, Indocement, and Semen Andalas.

Mexico's Cemex SA de CV now owns more than a 25 percent stake in state-owned Semen Gresik, and is planning to purchase another 51 percent stake. The government is planning to sell more shares in Semen Gresik as part of this year's privatization program.

Meanwhile, in response to the above demand, KPPU pledged that it would follow up the findings of Monopoly Watch.

"We will certainly follow up the report," said Soy Pardede, deputy chairman of KPPU.

Soy said that KPPU put the cement industry on its watchlist in 2000 because there were regular hikes in the price of cement products at the time.

However, he said, within several months of the list being issued, the price increases stopped, prompting the KPPU to drop the cement sector from its watchlist.