Holcim Said to Face Fine of 20% of 2005 Revenue From Brazil

Holcim Ltd. (HOLN) may receive a fine this year for price fixing in Brazil that is a third less than the maximum expected by the cement maker.

Antitrust regulator Cade will probably issue a penalty of 20 percent of Holcim’s 2005 revenue in the country, according to a person familiar with the matter who declined to be identified because the process is private.

Holcim may receive a fine of as much as 30 percent of Brazil revenue in that year, Roland Walker, a company spokesman, said in an e-mail, declining to give the sales figure.

Cade is deciding whether to fine cement makers after Brazil’s Justice Ministry said in November that companies set prices and divided clients in an “elaborate cartel scheme.” Brazil’s Economic Defense Secretariat recommended in November that Cade fine six cement makers including Holcim, Cimpor Cimentos de Portugal SGPS SA (CPR) and Camargo Correa Cimentos SA.

Brazil accounts for 3 percent to 4 percent of revenue for the Jona, Switzerland-based company, Ian Osburn, an analyst at ING, wrote in a report last year. Holcim had sales of 18.5 billion Swiss francs ($18.6 billion) in 2005, and its proportion of revenue from Latin America was similar to that in 2011, according to data compiled by Bloomberg.

If Brazil accounted for 4 percent of revenue in 2005, a 20 percent fine would be 148 million francs, while a 30 percent fine would be 222 million francs.

The probability of Cade judging against the cement companies is “close to 100 percent” and they will probably appeal, a process which could take five to eight years, Paulo Furquim de Azevedo, a Cade commissioner between 2005 and 2009, said by phone July 20. In almost 70 percent of cases, Brazil’s judiciary has confirmed Cade’s decisions, he said.

Aggravating Factor

As cement is important in economic terms for construction and housing “this is a factor which aggravates the fine,” he said. Holcim may also face a double fine because it has already had a penalty for anti-competitive behavior in its Brazilian aggregates business, he said.

Cade, which started its review in November, normally reaches decisions within 18 months and will decide in a final ruling whether Holcim should be considered a repeat offender, Vanessa Motta, a spokeswoman, said by e-mail.

French cement-maker Lafarge SA (LG) paid 43 million Reais ($21.1 million) in 2007 to settle the case and is not on the list of companies that could be fined.

Cade can’t provide information regarding evidence such as dates, prices and certain business practices because of non- disclosure commitments, Motta said.

The Holcim unit had capacity of 5.3 million tonnes of cement and employed 2,131 people in 2011, according to the Swiss company’s annual report.

Chief Executive Officer Bernard Fontana has said he intends to boost earnings by $1.6 billion by the end of 2014 while keeping Holcim’s investment-grade rating. Holcim is contesting a $400 million cartel charge dealt to two Indian units.

To contact the reporters on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net; Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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