building a STRONGER foundation - Cemex

February 7, 2011, CEMEX Polska received a formal response to its appeal from the Protection Office in which the Protection Office
made an application to the Polish Court of Competition and Consumer Protection to reject CEMEX Polska’s appeal. The response
from the Protection Office argued that CEMEX Polska’s appeal is not justified, and it maintained all of the statements and arguments
from the Protection Office’s decision issued on December 9, 2009. On February 21, 2011, CEMEX Polska sent a letter to the court in
which it kept its position and argumentation from the appeal and widely opposed to arguments and statements included in the response
of the Protection Office. The decision on the fines will not be enforced until two appeal instances are exhausted. According to the
current Polish court practices these two appeal proceedings should take at least three years. On December 31, 2010, the accounting
provision created in relation with this proceeding was Polish Zloty 72.3 million (approximately U.S.$27.22 million as of April 30,
2011, based on an exchange rate of Polish Zloty 2.6559 to U.S.$1.00).
Antitrust Investigations in Europe by the European Commission. On November 4, 2008, officers of the European Commission,
in conjunction with officials of the national competition enforcement authorities, conducted unannounced inspections at our offices in
Thorpe (United Kingdom) and Ratingen (Germany). Further to these inspections, on September 22 and 23, 2009 CEMEX’s premises
at Madrid, Spain were also subject to an inspection from the European Commission.
In conducting these investigations, the European Commission has alleged that we may have participated in anti-competitive
agreements and/or concerted practices in breach of Article 101 of the Treaty on the Functioning of the European Union (formerly
Article 81 of the EC Treaty) and Article 53 of the European Economic Area (“EEA”) Agreement in the form of restrictions of trade
flows in the EEA, including restrictions on imports into the EEA from countries outside the EEA, market sharing, price coordination
and connected anticompetitive practices in the cement and related products markets. Since the inspections, we have received requests
for information from the European Commission in September 2009, October 2010 and December 2010, and we have fully cooperated
by providing the relevant information on time.
On December 8, 2010, the European Commission informed us that it has decided to initiate formal proceedings in respect of the
investigation of the aforementioned anticompetitive practices. These proceedings would affect Austria, Belgium, the Czech Republic,
France, Germany, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom. The European Commission has indicated that
we, as well as seven other companies, will be included in these proceedings. These proceedings may lead to an infringement decision,
or if the objections raised by the European Commission are not substantiated, the case might be closed. This initiation of proceedings
relieves the competition authorities of the Member States of the European Union of their competence to apply Article 101 of the
Treaty on the Functioning of the European Union to the same case. We intend to defend our position vigorously in this proceeding and
are fully cooperating and will continue to cooperate with the European Commission in connection with this matter.
If the allegations are substantiated, significant penalties may be imposed on our subsidiaries operating in such markets. In that
case, pursuant to European Union Regulation 1/2003, the European Commission may impose penalties of up to 10% of the total
turnover of the relevant companies for the last year preceding the imposition of the fine for which the financial statements have been
approved by the shareholders’ meeting of the relevant companies.
On April 1, 2011, the European Commission notified CEMEX S.A.B. de C.V. a decision under Article 18(3) of Council
Regulation (EC) No 1/2003 of December 16, 2002 on the implementation of the rules on competition set forth in Article 81 of the EC
Treaty (current Articles 101 and 102 of the EC Treaty). CEMEX is preparing all the requested information in order to provide a timely
and complete reply within the deadlines imposed by the European Commission. As of April 18, 2011, CEMEX submitted the reply to
one of the questions and is due to submit the rest of the requested information by the end of June 2011.
Antitrust Investigations in Spain by the CNC. On September 22, 2009, the Investigative Department (Dirección de
Investigación) of the Spanish Competition Commission (Comisión Nacional de la Competencia, “CNC”), applying exclusively
national antitrust law, carried out another inspection, separate from the investigation conducted by the European Commission, in the
context of possible anticompetitive practices in the production and distribution of mortar, ready-mix concrete and aggregates within
the Chartered Community of Navarre (“Navarre”). We fully cooperated and provided the CNC inspectors all the information
requested. On December 15, 2009, the CNC started a procedure against CEMEX España and four other companies with activities in
Navarre for alleged practices prohibited under the Spanish competition law. The allegations against CEMEX España relate to several
of our ready-mix plants located in Navarre, which we operated from January 2006 (as a result of the RMC acquisition) until
September 2008, when we ceased operations for these plants.
On November 3, 2010, the CNC Investigative Department provided CEMEX España with a Statement of Facts (similar to a
statement of objections under European Union competition law) that included allegations that could be construed as a possible
infringement by CEMEX España of Spanish competition law in Navarre. The
Statement of Facts was addressed to CEMEX España, but also indicated that its parent company, New Sunward, could be jointly and
severally liable for the investigated behavior.
66