Supply Firm Accused of Being Anti-Competitive

January 11, 2008

One of Costa Rica’s oldest and largest construction materials distributors has been fined for anti-competitive practices.

The government’s Competition Promotion Commission slapped Abonos Agro with the $128,000 fine this week after a fouryear investigation.

The company has two months to appeal the decision.

The commission – part of the Economy, Industry and Commerce Ministry – began investigating Abonos Agro in 2004 after receiving a range of anonymous complaints about high prices and anti-competitive practices.

At the end of the investigation, the allegation that finally stuck was product tying, a type of anti-competitive behavior in which a company ties a popular product to one of its less popular ones.

In the case of Abonos Agro, the company had a near-monopoly on the distribution of construction steel in the Costa Rican market, but would sometimes sell only if customers also bought its less-in-demand plate steel, according to commission representative Ana Victoria Velázquez.

That was a violation of Law 7472, which “prohibits sales of a product predicated on the purchase of other available goods or services,” said a statement from the commission.

Abonos Agro was able to pull off the product tying mainly because it and the country’s principal construction steel producers were part of the same holding company, Grupo Pujol-Martí, said Randall Murillo,Costa Rican Construction Chamber executive director.

Coming four years after the start of the investigation, the fine isn’t likely to have much effect on the market, mostly because the Pujol-Martí grip had already been broken, Murillo said.

Abonos Agro was acquired in October by Guatemalan company Grupo Progreso (TT, Oct. 12, 2007), while half of Laminadora Costarricense – a construction steel manufacturer and the other Pujol-Martí company named in the commission’s statement – now belongs to Arcelor Mittal, one of the world’s largest multinational steel producers.

 

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