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CPC to decide on cement companies today

24/07/2007 10:07
The Commission for the Protection of Competition is expected to decide on Tuesday on the merger of the two cement companies in Cyprus, Vasiliko Cement Works and Cyprus Cement Company. After a period of inactivity due its staff’s work stoppage and the investigations that are carried out in relation to the CCTV system, the Commission held a meeting on Monday to examine the issue. The meeting will continue today at 5.30 pm.

The CPC will examine whether the merger of the two companies (announced on March 12, 2007) will hit competition. As the two companies had announced, if the merger is approved by the supervisory authorities, Vasiliko will undertake the activities of CCC in Moni, which is expected to close in 4 or 5 years. Its operations will be transferred gradually to the new production line that will be launched in Vasiliko. The new unit will be able to produce up to 2.4 million tons of cement a year against 1.7 million today, while the new line will reduce the CO2 emissions by 40%.

According to the agreement, Vasiliko will undertake the management of CCC on the production and sale of cement. The agreement provides for the issue of 18.2 million shares by Vasiliko to CCC and the acquisition of the latter’s investments.

Since the announcement of the agreement, CCC recorded gains of 85.4% and Vasiliko 6.4%.

CCC is the owner of 960 donums of land in a seaside area, which will be developed if the agreement is finalized.

Doubts for competition

In an announcement released on April 26, 2007, the CPC had emphasized that the act of concentration of Vasiliko Cements and Cyprus Cement Company raises doubts on its compatibility with the competitive market. The Commission decided to carry out an investigation pursuant to article 24 of the Law on the Protection of Competition.

Vasiliko currently controls 75% of the cement market and CCCI 25%. According to their indicative results, CCC generated profits of £1.3 million in 2006 against £850 thousand in 2005, while Vasiliko enjoyed profits of £10.7 million compared to £6.9 million in 2005.