The Competition Commission’s recent decision to prevent the centralised publication of cement usage statistics on the grounds of alleged collusion by the cement manufacturers, has robbed the construction industry of the most up-to-date information on building and construction activity.
The lack of information and resulting impact on forward planning has come at a difficult time for the beleaguered construction industry.
“In its quest to prevent collusion, it appears that the Competition Commission is taking South African business into a McCarthy-style era in which, instead of finding a communist under every bush, they are seeking collusion behind every door. The timing of this decision could not be worse for the industry, as the strategic importance of this data is enormous,” says Dr Llewellyn Lewis, principal consultant of BMI-Building Strategy Research Unit.
“One has to question the motive of the Competition Commission when continuing to withhold such crucial strategic information. Are they really seeking evidence of collusion? Industry players must speak out to ensure that the Competition Commission does not mistakenly wield its power to hoard information.”
According to Lewis, these statistics have been available for decades but their value as the most current and reliable source of information on building and construction has only recently been acknowledged.
Lewis says, “These statistics have been published, albeit in a scattered form, since 1892. Two years ago, people suddenly realised that these statistics constitute the most current and reliable indicator of building activity, because cement is the most widely used construction material. Having this information affords companies the ability to plan their capacity in real time synchronisation with market activity, making them a significant planning tool – not a marketing tool,” states Lewis.
To date, many industry stakeholders have made representations to the Competition Commission, requesting for the decision to withhold this information to be reversed. The representations made it explicit ‘that the data provides information on volume and end-use product broken down by province’, and does not refer to pricing or market share.
Thus far, the Commission’s only response to the representations has been a series of ‘telephonic interviews’ that were ostensibly aimed at gauging how the industry uses this information.
“The aspect that is most worrying is the lack of any real action or a statement one way or the other. Keeping an entire industry in limbo as it fights for its very life is destructive and incomprehensible. The data cannot possibly be seen as collusive because it provides no information on pricing, market share, profit of the various suppliers, or any other information that could even remotely be used to collude on pricing or market allocation. Withholding it is akin to banning the publication of statistics on car sales or mortgages advances, which have long held up as critical economic indicators,” continues Lewis.
“The cement statistics have not changed in character since their original publication 120 years ago – only their use has. This can be attributed to the intervention of experts. As Stephen Levitt points out in Freakonomics, information can be used as a guiding light or a weapon depending on who wields it and how. The best way to prevent information from being used as a weapon is to publish it widely.”
As Lewis points out, this comes at a time in which all players in the construction industry are fighting for survival.
“The sudden risk-averse zeal of the banks has basically choked the flow of money that lubricates the economy. The Competition Commission and the Banks need to be realistic about the impact of their actions on the building and construction industry, which is a major player in our economy and a key creator of jobs in this country. Anything that can be done to facilitate the market’s recovery should be a priority for every stakeholder. As Warren Buffet recently pointed out in a CNN interview: if the housing industry doesn’t improve, the economy won’t improve,” says Lewis.