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Jordan: Ministry threatens legal action against cement company

AMMAN -- The Ministry of Industry and Trade is weighing legal measures against the Jordan Cement Factories Company (JCFC) for excessively raising cement prices, according to a statement issued on Sunday.

In the statement, the ministry said the company indicated that its procedures would be based on the Anti-trust Law issued in 2004.

The ministry's statement came after the company raised the prices of cement by JD4-JD8 per tonne. Earlier press reports dismissed news of a price increase, the Jordan News Agency, Petra, reported.

JCFC Communication Officer Hana Attiga told The Jordan Times that the increase in prices was justified as the government decided recently to increase the price of fuel oil.

"We increased the price due to the hike in fuel oil price. Fuel oil is the sole source of energy for us and thus we increased the price. Fuel oil constitutes 70 per cent of the total production cost," Attiga said Sunday in a telephone interview.

Asked about the government's intent to take legal measures, she said: "They can say whatever they want. It is logical to increase the prices after the hike in fuel oil price. We have been looking for other alternative resources for energy, such as natural gas and oil shale, but to no avail," she added.

Under Article 6 of the law, an enterprise with a dominant position in the local market or a significant part thereof, shall be prohibited from abusing this dominant position in order to prevent, limit or weaken competition, the ministry's statement said.

The anti-trust directorate at the ministry will submit its recommendation to the industry and trade minister to adopt the appropriate procedure, under the law, according to Petra.

Under the law, a company must pay a 5 per cent of its annual sales as a fine should it be found in violation and is proved to be abusing its dominant position.

As an alternative measure, the ministry may opt to fix the prices of different brands of cement considered vital for the construction business, through submitting a recommendation to the Prime Ministry in this regard, the statement indicated.

Although the company dismissed any distribution and production problems, merchants and citizens predicted that the price of cement would increase, especially after the shortage witnessed in this commodity at the beginning of this month.

As a result of the crisis witnessed at the beginning of this month, one tonne of cement was sold in the black market at over JD108.

According to contractors, the price increase will push up prices of housing units, whereas the Jordan Consumer Protection Society said the higher price was unjustified when compared with the hefty profits generated by the firm.

By Mohammad Ghazal

© Jordan Times 2007