By KENNEDY  MUPESENI –
LAFARGE Cement Zambia Plc has been fined more than K99 million which is 10 per cent of its annual turnover as at 2012 for abuse of dominance.
The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has fined the cement manufacturing firm K99,245,400 for application of abuse of loyalty discount schemes, price discrimination and excessive pricing.
The decision to fine Lafarge Plc was made during the 29th Board of Commissioners’ meeting for the adjudication of cases held in Lusaka on December 14, 2017.
This is according to a CCPC statement released yesterday.
Board of Commissioners chairperson Kelvin Bwalya said the fine was decided after exhaustive investigation by CCPC initiated in August 2013, following observed persistent increase in the price of cement.
“Lafarge Plc’s pricing discriminated the domestic market against the export market and further applied discriminatory pricing for the Lusaka segment of the Zambian market. The company abused its dominant position and had excessively priced its cement on the domestic market,” he said.
The board has further ordered Lafarge to cease and desist from application of its loyalty schemes, discrimination and excessive pricing.
“The board has also directed Lafarge to present proposal to the commission within three months on how it will ensure that it complies with the provisions of the CCPC Act,” Mr Bwalya said.
The investigation which lasted for four years revealed that the Lafarge Plc manufactures markets and distributes Portland cement and had enjoyed market shares of 48 to 86.4 per cent in Zambia during 2010-2012 investigative period.
He said this gave it a dominant position in the market as investigations also revealed that the cement imports only accounted for four to eight per cent of the market hence offering no effective competition.
Particularly, the investigations revealed that from 2010, Lafarge Plc started running loyalty programmes which categorised its customers into tiers based on the volumes.
But that in July 2010 Lafarge Plc discontinued the scheme due to dilution of its margins and implemented a uniform pricing policy with the Ndola price maintained at around K49 while the Lusaka prices were adjusted by four to 51.5 per cent.
Lafarge re-introduced the schemes targeting Lusaka, the Democratic Republic of Congo, Copperbelt and Chipata under a similar categorisation and graduated applicable discounts based on full month’s purchase.