The Competition Commission of Mauritius (CCM) welcomes the decision of the government to liberalise the price and import of cement as it make the market competitive and benefits consumers.
The Cabinet agreed on April 8 to liberalise the import, production, export and price of cement with effect from July this year with a view to allowing new players to enter the market The CCM said that government’s decision is in line with the conclusion of a report by its Executive Director Dr Sean Ennis.
Dr Sean Ennis’s report was completed prior to the government’s announcement. The purpose of the study was to understand the conditions of competition and recommend action by the government, if necessary.
The report states: “Preventing a company from importing more cement, through an import quota, clearly prevents, restricts and distorts competition, because companies will only compete vigorously for one another’s customers if they have the ability to supply those customers if successful.
“Import controls are likely either to restrict supply, thus driving up prices, or at least to preserve importers’ market shares, insulating them to some extent from competition.”
The report said that the cement industry is currently highly concentrated and may create a risk of cartelisation. “The entry of new players in the industry will certainly reduce market concentration and hence the risk of collusion.
“If some or all of the new entrants presently considering importing cement or constructing facilities in Mauritius do indeed enter the market, then the prima facie case for price controls seems likely to fall away,” Dr Ennis said.
Mauritius has annual imports of cement around 630,000 tons. Three cement operators import bulk cement in Mauritius – the State Trading Corporation (STC) and two private operators, Lafarge Mauritius and Holcim Mauritius.
The estimated share of imports for the STC is 50% and the remaining 50% is shared between the two private firms. According to CCM, the cement market is likely to undergo major structural changes with the coming of new operators establishing cement manufacturing plants on the island.
Two cement operators, namely Binani Cement Ltd and Oriental Group (Mauritius) Industry Ltd, have recently obtained their Environmental Impact Assessment (EIA) licences for manufacturing cement in Mauritius.
The Mauritius Chemical and Fertilizers Industry (MCFI) is also considering setting up a cement manufacturing plant.
By Clifford Vellien