The Competition Authority ("Authority") has finally published its long awaited sector inquiry report into cement sector on November 2, 2016. The Board had launched the inquiry on May 8, 2014, citing the increasing number of complaints stemming from the industry. In its launch announcement, the Board had highlighted the increasing rate of complaints. The Authority, in its capacity of competition advocacy, collected input from the public and held a stakeholders conference on November 7, 2014 to canvass the challenges before the competition in the cement sector.

The Authority published its 177 page long report that contains certain extrapolations on grey Portland cement after two and a half years of consultations, collection of data and analysis. Notably, the report delves into detail on geographical markets, barriers to entry into the market, breakdowns on city /undertaking/product/client, long and short term fluctuations on cost and demand, profit maximization opportunities and efficiency levels. The report tries to utilize economic simulations to support and demonstrate its conclusions.

In sum, the report concludes that (i) there are some market barriers to entry due to logistics, economics and legal constrains, (ii) prices are directly affected from the conjuncture and the general outlook of the economy, (iii) the level of competition varies greatly between different cities, (iv) the cement prices are not directly affected from demand, seasonal effects and excess supply, and (v) the market does not have a high level of concentration as the market shares are not consolidated.

All in all, the sector inquiry report attempts to take a snapshot of the status of the sector from a number of perspectives including legal and economics.

This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in December 2016. A link to the full Legal Insight Quarterly may be found here.

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