Cement base to Fletcher rebuff

New Zealand is the second most expensive place in the world for cement and fears about this situation worsening prompted the Commerce Commission decision to deny Fletcher Building permission to buy the assets of W. Stevenson.

Only Mexicans pay more for cement than New Zealanders, says the commission, which cited a survey by Credit Suisse First Boston, drawing on findings from 40 countries.

The commission said it was concerned about "weak price competition" between Fletcher and cement competitor Holcim NZ.

The commission's full copy of its decision shows its consternation about cement prices being "among the highest in the world".

Fletcher and Holcim could have been left with a duopoly if the purchase had been allowed - meaning cement prices could rise even further. And that would have meant any likelihood of a third party importing cement to compete with Holcim and Fletcher would be limited.

By not allowing the Fletcher purchase to go ahead, the way would be open for a third party to buy Stevenson. The commission speculated Stevenson could be sold to an overseas firm and said it would provide that foreign business with a "bridgehead" opportunity for entry into New Zealand.

Holcim cement general manager Jeremy Smith was not sure about the pricing claims. "I don't have a handle on world cement prices," he said.

The commission was not concerned about all aspects of Fletcher's proposal. It said it was not worried about competition in the Auckland precast concrete products market. Competition among the masonry products sector would have been taken care of by Fletcher proposing to sell Stevenson's Auckland and Christchurch masonry operations.

What the world pays

Mexicans pay US$121 a tonne.

New Zealanders - US$120.

Belgians - US$101.

Britons - US$86.

Americans - US$75.

Japanese - US$61.

Indonesians - US$63.

Chinese and Egyptians - US$34.