On June 30, 2006 the Federal Anti-monopoly Service of Russia (“FAS”) and Eurocement Group signed a settlement of the dispute concerning the violation of the antitrust laws. Its details were announced today at a joint press conference held by the director of the FAS, Igor Artemiev, the President of Eurocement Group, Mikhail Skorohod and the Chairman of EPAM Dimitry Afanasiev. 

At the press conference the parties declared that they had reached a decision to sign a voluntary settlement that worked in the interests of both contracting parties. On the one hand, the voluntary settlement clarifies the matter of the development of cement industry of Russia and that creates the necessary preconditions for augmentation of investments into production capacities of the cement company that has crucial importance for the increase in volumes of construction in Russia. On the other hand, the settlement of this lawsuit creates a precedent where the FAS collects for the Federal Budget a sum many times that of earlier amounts.

According to the settlement, Eurocement Group will pay into the state budget a fine of RUB 267m.

As part of the agreement the FAS has cancelled its order for a reduction of cement prices by Eurocement Group.

Addressing journalists Igor Artemyev noted that for the period since May 2005 the price for cement charged by Eurocement Group had not been excessively high because of economic forces. In 2006 the company did not increase prices, despite the seasonal increase in the prices in the cement market, inflation, higher tariffs and an increase in demand. Today the company actually sells cement at a lower price than competitors. Also, according to the FAS, another factor in reaching the settlement was that the activities of Eurocement Group had a positive social and economic effect. According to the President of Eurocement Group, Mr. Michael Skorohod, the increase in earnings of the company has allowed it to raise tax payments by 2.5 times - up to RUB 8 bn last year.

The President of Eurocement Group, Michael Skorohod, stated that the company is satisfied by the settlement of the lawsuit which will allow a programme of modernization and reconstruction at a cost of more than RUB 10 bn. According to the settlement, Eurocement Group undertakes to observe requirements of the antimonopoly law, to not undertake unreasonable actions on the termination or restriction of the manufacture of cement without the preliminary consent of the FAS. The company also undertakes to give the FAS information on current prices on a quarterly basis, and to notify it on all transactions as a result of which the company acquires the ownership of more than 15 % of other companies.

EPAM was honoured to be thanked by Mr. Artemev for its contribution to reaching a settlement of this lawsuit. “Thanks are due to the lawyers for the creation of confidential and constructive conditions”