Monopoly Watch warns possible cement cartel

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.