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Competition watchdog blocks sale of Ohorongo Cement to Chinese company

Competition watchdog blocks sale of Ohorongo Cement to Chinese company

The Namibia Competition Commission has stopped Chinese company West China Cement Limited from buying Schwenk Namibia, which owns and operates the Ohorongo Cement factory, for N$1.5 billion.

The Commission in a statement on Tuesday said the proposed acquisition was uncompetitive since West China Cement Limited already has a majority stake in Cheetah Cement, the sole competitor to Ohorongo Cement.

Investigations by the Commission revealed that the proposed transaction was likely to substantially prevent or lessen competition in the local cement market due to coordination, which would likely to lead to a strengthening of dominance and the exercise of market power to the detriment of consumers.

The Commission added that barriers to entry in the cement market are high and it is not likely that a small undertaking, particularly small undertakings owned or controlled by historically disadvantaged persons, will be able to gain access to or be competitive in the relevant market.

The Commission further noted that collusive conduct is of greater concern to its authorities than single firm dominance.

“This is not only because such conduct often results in the most egregious form of anti-competitive outcomes such as price-fixing or market allocation, but also because of the inherent difficulty in detecting and policing conduct between competitors that are practised subtly, if not entirely tacitly,” the Commission stated.

On 19 June 2019, the sale of Schwenk Namibia to another company, the Singapore-listed International Cement Group, was blocked by the Singapore Exchange (SGX) on grounds that Schwenk Namibia is not profitable and International Cement Group does not have the money for the transaction.


About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys