Cement producers under scrutiny

PANAMÁ. Panamanian consumers are being hit from all sides, first the high price of fuel. leading to increases in the price of foodstuffs and other necessities, and the extortionate cost of cement, sending home prices rocketing.

Construction in Panama is booming and represents around 20.04 percent of the Gross Domestic Product and generates $3.4 billion a year.

But in recent months cement prices are making a dent in the earnings of building companies.

When builders learned that another rise in cement prices was imminent, they formally presented a report to the Consumer Protection Authority ACODECO (Autoridad de Protección al Consumidor y Defensa de la Competencia) accusing producers of monopolistic practices.

ACODECO decided to inspect the companies after receiving complaints from the Panamanian Construction Chamber CAPAC (Camara Panameña de la Construccion), whose members suffer every time cement prices rise.

On Tuesday, ACODECO searched the premises of five companies dedicated to the manufacturing, sale and distribution of cement.

The enterprises were all affiliated to the consortiums CEMEX and Cemento Panama.

The Communications Coordinator of CEMEX, said that this was a “routine operation” and therefore the company was not in trouble.

Cemento Panama was more open about the operation and pointed out in a press release that it is a strict policy of the company to comply with the current legislation regarding free competition. That was the reason why they collaborated fully with the Consumer Protection Authority during the inspection and provided all the information that was required.

According to an edict of the Commercial Tribunal, the companies inspected are going to be investigated by ACODECO ficials on the grounds that they have been involved in monopolistic practices that are contrary to free trading and hindered the entrance of other enterprises in the cement market.

Pedro Acosta, a member of a consumers group said that the measures adopted by ACODECO could not come at a better time, because according to him, the cement companies get together to fix prices in complete disregard of the users.

The cement business has grown over the last decade due to phenomenal amount of construction work around the country, like urban developments, building of roads and construction of ports.

It is estimated that in the local market around 1.2 million tons of cement are sold every year representing around $189 million in revenues.

Recently the construction industry has been hit hard by the high prices of construction materials such as steel and sand.

Real estate projects have to be modified to enable developers to afford the bills. Others have been abandoned when the costs eswere no longer viable.

The current international financial crisis is not helping, with banks less willing to gamble on real estate projects that have limited possibilty of being sold.

The ACODECO function is to investigate all reports about monopolistic practices that ultimately affect consumers and to put a stop to the offending companies by sanctioning them with fines and other punishments.