Lafarge Zambia Plc contravenes Competition Commission Act
Construction, Lafarge, Manufacturing

Zambia’s only stock exchange listed cement manufacturing company has informed shareholders that the company has been informed by the Competition and Consumer Protection Commission that it violated one of its Acts, according to a statement from Lafarge Zambia Plc.

Lafarge’s cement ensemble that now faces  Competition Commission price scrutiny 

“The Lafarge Zambia Plc. Board wishes to inform its shareholders and the market that on 30th of March 2021 the Competition and Consumer Protection Commission informed the Company that it had concluded that Lafarge contravened the Competition and Consumer Protection Act”, according to a statement published on SENS and issued by Company Secretary Chibuye Mbesuma Ngulube by order of the Board on 1st April 2021. “On 31st March 2021 the CCPC issued a press release in relation to its decision of 30th March 2021 which was followed by a press release issued by the Company”.

According to the statement, the Commission gave the following directives in relation to the Company:

  1. Lafarge shall be fined 10% of its annual turnover for the year 2019 and 10% of its annual turnover for the year 2020;
  2. The Company shall revert to alleged pre-cartel prices of USD 4.50 – USD 5 for a period of one year from the date of receipt of the decision of the Board;
  • The Company shall submit monthly average ex-works prices and any price adjustments be indexed to the exchange rate and be submitted to the Commission for review;
  1. The Company shall develop and implement compliance programme within 90 days of receiving the Board directive; and
  2. Lafarge shall make undertakings within 90 days of receiving the directive, that their staff shall not engage in any anti-competitive behavior and the Company shall not facilitate and/or participate in any anti-competitive conduct including the exchange of information.

In 2020, the company made an estimated K1.2 billion in turnover (based on Financial Insight forward estimate from their 2020 half year results announcement of K637 million turnover). The fine estimation from Financial Insight is around K11 million for the FY 2019 and K12 million for the FY 2020.

The Chief Financial Officer will also have a further headache of restating financial forecasts for the FY 2021 as the company is forced to revert to lower prices. His headache will be shared with the Operations Manager who will be producing

On the public relations front, the Jimmy Khan led Management team will work hard to shake off the perception of cartel in an industry that saw a sharp rise is a commodity that is heavily on demand due to ubiquitous construction in Zambia.

Lafarge are not alone in the fine. Mpande was another cement manufacturer that has also been caught up in the “cement price hike” debacle.

The genesis of the investigation started when Lafarge made the bold move of increasing retail prices of their product citing two important value chain inputs as the reason. “We would like to inform the public and our esteemed customers that Lafarge Zambia plc has increased the cement price by an average of 20% to sustain business operations and provide quality cement. The decision to increase the price was a result of the current increase in the prices of fuel and electricity”.

What was not anticipated from the increase was the cascaded effect the prices would have on a bustling industry.

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