Six Brazilian cement makers colluded to fix prices, hampering competition in the midst of a construction boom, Brazil’s justice ministry said.

Holcim, Cimpor and local producers Votorantim Cimentos, Camargo Correa, Itabira Agro Industrial and Cia. de Cimentos Itambe set prices among themselves to force smaller rivals from the market, the ministry’s economic-law secretariat said in a report.

SDE, as the Brasilia-based agency is known, will submit its report to Cade, the nation’s antitrust regulator, recommending that the companies be fined and condemned for anti-competitive practices. Consumers overpaid BRL1.5bn (US$850m) for cement they bought last year, the report said.

"These companies made accords to fix prices, raise them too; divide market share; coordinate their market actions in both the cement and concrete sectors," secretariat head Vinicius de Carvalho told reporters in Brasilia on Thursday.

The report, following a five-year inquiry, comes as allegations of corruption and cost overruns hamper preparations for the 2012 soccer World Cup and 2016 Rio de Janeiro Olympics.

Cement sales in Brazil soared by about a third in the past two years due to a commodities-based economic surge and the government’s efforts to reduce a housing deficit and expand the country’s roads, ports and other infrastructure.

The structure of Brazil’s cement industry is largely uneven, with groups having strong market control over specific regions, which increases the potential for collusion.

The number of producers has shrunk dramatically from 19 in the early 1990s to about 10 in 2010.
In a statement e-mailed to Reuters, Votorantim said that any comment "will follow a detailed analysis of the SDE report once the company is notified."

Carvalho said there is evidence that industry takeovers and asset swaps between producers may have been made to prevent rivals from entering the lucrative industry.

The six companies named in the report control as much as 90 per cent of Brazil’s market for cement and concrete.

To restore competition in the market, the companies should be forced to dispose of assets, Carvalho said, adding that the SDE could include that proposal in the report submitted to Cade.

Last year, Votorantim and Camargo Correa thwarted steelmaker CSN’s bid for full control of Cimpor -- a move that could have made CSN one of the top four producers in Brazil.

CSN had to abandon the plan after Votorantim and Camargo Correa clinched more than a third of the Portugal-based company.

The six companies charged could be fined the equivalent of 30 per cent of gross revenue in 2005, the year before the probe began.

SDE also recommended imposing sanctions on three industry groups representing makers of cement and concrete, along with six industry executives. The groups are Abesc, Brazil’s concrete-service company association; ABCP, Brazil’s Portland cement association; and SNIC, the national cement-industry association.

SDE’s probes against Lafarge and another company, Cimentos Liz, were dropped after Lafarge sought a settlement with Cade and evidence against Cimentos Liz was declared "insufficient to pursue any charges," the report said.