building a STRONGER foundation - Cemex

On December 10, 2010, after receiving CEMEX España’s observations, the CNC Investigative Department notified us of a
proposed decision, summarizing its findings in the investigation. This proposed decision, which suggests the existence of an
infringement, has been submitted to the Council of the CNC, together with CEMEX España’s opposition to all charges. This body will
examine the case and the evidence proposed by all the parties and issue a final decision. On May 17, 2011, the CNC Council decided
to accept CEMEX España’s request to review the evidence presented by the other parties. As a result, the deadline for the CNC
Council to issue a decision, which is 18 months from the formal start of the procedure on December 15, 2009, has been interrupted
and will resume once the other parties present the proposed evidence requested by CEMEX España.
Under Spanish law, the maximum fine that could be imposed in this procedure would be 10% of the total turnover of CEMEX
España for the calendar year preceding the imposition of the fine. CEMEX España denies any wrongdoing and is fully cooperating
and will continue to cooperate with the CNC officials in connection with this matter.
Antitrust Investigations in Mexico. In January and March 2009, we were notified of two findings of presumptive responsibility
against CEMEX issued by the Mexican Competition Authority (Comisión Federal de Competencia or “CFC”), alleging certain
violations of Mexican antitrust laws. We believe these findings contain substantial violations of rights granted by the Mexican
Constitution.
In February 2009, we filed a constitutional challenge (juicio de amparo) before the circuit court, as well as a denial of the
allegations, with respect to the first case. The circuit court determined that CEMEX lacked standing since the notice of presumptive
responsibility did not affect any of CEMEX’s rights; therefore, CEMEX should wait until the CFC concludes its proceeding and issues
a final ruling before raising its constitutional challenge again. However, in July 2010, in light of the possible violations to CEMEX’s
constitutional rights, the CFC terminated the existing proceeding and reinitiated a new proceeding against CEMEX to avoid such
violations. We believe that Mexican law does not entitle the CFC to reinitiate a new proceeding but only to continue with the original
one. In August 2010, we filed a separate constitutional challenge (juicio de amparo) before the District Court to argue against the
reinitiated proceeding. The District Court in Monterrey determined that the order to reinitiate the proceeding and the notice of
presumptive responsibility did not affect any of CEMEX’s rights; CEMEX filed an appeal before the District Court in Monterrey,
which will be sent to the circuit court, to argue against such determination.
With respect to the second case, in April 2009, we filed a constitutional challenge (juicio de amparo), and in May 2009, we filed
a denial of the CFC’s allegations. In November 2010, the Circuit Court in Monterrey, N.L., Mexico, ordered the case to be heard by a
District Court in Mexico City claiming that it lacked appropriate jurisdiction. In December 2010, similar to the first case, the District
Court in Mexico City determined that CEMEX lacked standing with its constitutional challenge (juicio de amparo) since the notice of
presumptive responsibility did not affect any of CEMEX’s rights; therefore, CEMEX should wait until the CFC concludes its
proceeding and issues a final ruling before raising its constitutional challenge again. CEMEX expects to file an appeal before the
District Court in Mexico City to argue against such determination. CEMEX filed an appeal before the District Court in Mexico City to
argue against such determination.
Antitrust Cartel Litigation in Germany. On August 5, 2005, Cartel Damages Claims, SA, or CDC, filed a lawsuit in the District
Court in Düsseldorf, Germany against CEMEX Deutschland AG and other German cement companies. CDC originally sought
€102 million (approximately U.S.$151.2 million as of April 30, 2011, based on an exchange rate of €0.6745 to U.S.$1.00) in respect
of damage claims by 28 entities relating to alleged price and quota fixing by German cement companies between 1993 and 2002,
which entities had assigned their claims to CDC. CDC is a Belgian company established by two lawyers in the aftermath of the
German cement cartel investigation that took place from July 2002 to April 2003 by Germany’s Federal Cartel Office, with the
express purpose of purchasing potential damages claims from cement consumers and pursuing those claims against the alleged cartel
participants. In January 2006, another entity assigned alleged claims to CDC, and the amount of damages being sought by CDC
increased to €113.5 million plus interest (approximately U.S.$168.3 million plus interest as of April 30, 2011, based on an exchange
rate of €0.6745 to U.S.$1.00). On February 21, 2007, the District Court allowed this lawsuit to proceed without going into the merits
of this case by issuing an interlocutory judgment. All defendants appealed, but the appeal was dismissed on May 14, 2008. The
lawsuit will proceed in a court of first instance.
In the meantime, CDC acquired new claims by assignment and announced an increase in the claim to €131 million
(approximately U.S.$194.2 million as of April 30, 2011, based on an exchange rate of €0.6745 to U.S.$1.00). As of April 30, 2011, we
had accrued liabilities regarding this matter for a total amount of approximately €20 million (approximately U.S.$29.7 million as of
April 30, 2011, based on an exchange rate of €0.6745 to U.S.$1.00).
The District court in Düsseldorf, Germany had called for a hearing on the merits of this case, scheduled for May 26, 2011. This
hearing has been cancelled and no new date for a hearing has been notified.
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