An analysis of the ownership of
Market watchers are worried that if the takeover goes ahead, this will mark the end of competition in the cement sector and the potential for preferential contractual agreements and bidding advantages will become the norm.
The ownership structure shows that the prospective buyers of
Documents seen by The Namibian show that
Chinese companies are said to jealously guard their "
This speculation is supported by import and export data from the
Economist
He said the proposed investment in the cement sector is welcome as long as it does not lessen the competition among the players as it will disadvantage consumers and the entire economy.
Sectors that are not competitive enough can lead to consumers and the economy getting raw deals as stakeholder firms that are barely competing can charge more and invest less, which in the end leads to a less productive economy and exploited customers.
INVESTMENT
Economist
"It has, however, to be ensured that competition takes place on a level playing field," said Schade.
He called on the
"Otherwise, the consumer might face higher than expected prices," Schade added.
Furthermore, Schade stated that if NaCC does not prevent potential collusion between producers and specific customers, it could result in preferential contractual arrangements and hence a competitive advantage.
Not only is the future prospect of cement being put in limbo if the takeover is allowed, currently the country has two cement producing companies that are importing cement from
Despite huge local cement production and an additional cement factory, the country imported cement valued at about N$147 million for five years ending in 2018.
Of the N$147 million, 80% was from
On exports, for the past five years
Local media in 2018 reported that
Cement clinker is one of the main ingredients in cement manufacturing.
Whale Rock allegedly bypassed the value chain requirement, which stipulates that a company that sets up a cement plant in the country must set up a full production chain of manufacturing cement in order to add value and protect domestic capacity.
This requirement was put in place because
Approached for comment,
Nevertheless, he said it was very important for companies in the industry to follow the objective of the 'Growth at Home' strategy to create value.
"We have our own people producing (cement). By importing, we don't achieve the objective. We have a huge challenge and it's not good," he said, adding that
COMPETITION AUTHORITY
According Jowetha Andima, the economist in the mergers and acquisition department at the NaCC, the commission has not approved the proposed merger since it has not received a merger notification.
Asked about the threat to competition in the cement sector, she said they were also not aware of the ownership structure of
Section 43 (3) of the Competition Act states that "no person, either individually or jointly or in concert with any other person, may implement a proposed merger to which Chapter 4 of the act applies, unless that merger is approved by the commission.
Further, section 44 (1) states that each undertaking involved in a proposed merger must notify the commission of the proposal in the prescribed manner. Given the above, the commission has not yet received a merger notification related to the proposed takeover.
"The commission has not approved the cited merger since it has not received a merger notification," Andima said.
Copyright The Namibian. Distributed by AllAfrica Global Media (allAfrica.com)., source