McKinsey accused of complicity in cement industry cartel

McKinsey & Co has been cast into the centre of the probe into cartel conduct in the cement industry, with evidence emerging that the global consultancy advised cement producers to undermine competitors by secretly conspiring. The startling admissions by a former MD of cement producer AfriSam at the Competition Tribunal’s hearings into alleged cartel conduct are the latest allegations about McKinsey’s questionable conduct. The firm is already under fire for allegedly facilitating corrupt deals between the Gupta family and state-owned entities. McKinsey denied that it had advised its clients to collude. The Competition Commission’s submission in the long-running cement industry case included a witness statement by former AfriSam MD Mike Doyle. In his statement, submitted to the Competition Tribunal last Monday, Doyle alleged that in 1998 McKinsey told AfriSam that it needed "to cartelise the industry by adopting a strategy which was known as co-opetition" — an act of co-operation between competing companies. Doyle has since passed away. The referral to the tribunal followed the commission’s investigation between 2008 and 2012 of collusive conduct in the cement industry against the four main producers, Natal Portland Cement Cimpor (NPC), Pretoria Portland Cement (PPC), Lafarge and AfriSam. The commission granted PPC conditional immunity, while AfriSam and Lafarge settled and paid fines of R128.8m and R148.7m, respectively. As part of their consent agreements with the commission, AfriSam and Lafarge pleaded guilty to contravening the Competition Act.