Cemex 2012 Annual Report Download - page 113

Notes to the
consolidated
financial
statements
113
< previous I contents I next >
• In October 2009, CEMEX Corp., one of CEMEX’s subsidiaries in the United States, and other cement and concrete suppliers
were named as defendants in several purported class action lawsuits alleging price fixing in Florida. The purported class
action lawsuits are of two distinct types: a) those filed by entities purporting to have purchased cement or ready-mix concrete
directly from one or more of the defendants; and b) those filed by entities purporting to have purchased cement or ready-mix
concrete indirectly from one or more of the defendants. Underlying all proposed suits is the allegation that the defendants
conspired to raise prices of cement and concrete and hinder competition in Florida. After a period of amended claims and
responses in 2010 and 2011, in which all parties presented their arguments, on September 21, 2011, both groups of
plaintiffs filed motions for class certification. On January 3, 2012, the court denied both motions, ruling that the cases cannot
proceed as class certification. On January 5, 2012, the court stayed both cases pending the resolution of any potential appeal
of the court’s ruling denying the motions for class certification. On January 17, 2012, the plaintiffs in the action involving
entities that purchased ready-mix concrete directly from one or more of the defendants filed a petition with the Eleventh
Circuit Court of Appeals, requesting such court to exercise its discretion to review the trial court’s decision denying their class
certification motion. In March 2012, CEMEX Corp. and the other defendants effected a settlement of both cases resulting in
CEMEX having to pay approximately 460 thousand dollars. CEMEX did not admit any wrongdoing as part of the settlements
and denies allegations of misconduct.
• In September 2009, the CNC separately conducted its own inspection in the context of possible anticompetitive practices in
the production and distribution of mortar, ready-mix and aggregates within the Chartered Community of Navarre (“Navarre”).
In December 2009, the CNC started a procedure against CEMEX España for alleged practices prohibited under the Spanish
competition law. In November 2010, the CNC provided CEMEX España with a Statement of Facts that included a possible
infringement by CEMEX España of Spanish competition law in Navarre. The Statement of Facts indicated to CEMEX España
that its parent company, New Sunward Holding B.V., could be jointly and severally liable for the investigated behavior. On
December 10, 2010, the CNC Investigative Department notified CEMEX of its proposed decision, which declared an existence
of infringement, and that it would submit the proposed decision to the CNC Council. The notification of the proposed decision
marked the end of the investigation phase. On December 29, 2010, CEMEX submitted its opposition to the proposed decision
denying all charges formulated by the CNC. On May 17, 2011, the CNC Council decided to accept CEMEX’s request to review
the evidence presented by the other parties. The maximum fine that the CNC could have imposed would be 10% of the total
revenues of CEMEX España’s ready-mix production activities within Navarre for the calendar year preceding the imposition of
the fine. On January 12, 2012, the CNC notified CEMEX of its final decision on this matter, imposing a fine of 500 thousand
euro (660 thousand dollars) against CEMEX España for price-fixing and market sharing in the concrete market of Navarre
from June 2008 through September 2009. CEMEX España denies any wrongdoing and on March 1, 2012, filed an appeal
before the competent court (Audiencia Nacional) requesting the interim suspension of the decision from the court until a
final judgment is issued. To that effect, CEMEX España has requested the CNC Council to suspend the implementation of its
decision until the court has decided on the requested interim measure. On July 10, 2012, the court has issued a resolution
agreeing to the suspension of payment of the fine.
• In June 2009, the Texas General Land Oce (“GLO”) alleged that CEMEX failed to pay approximately US$550 in royalties
related to mining activities by CEMEX and its predecessors since the 1940s on lands that, when transferred originally by
the State of Texas, contained a reservation of mineral rights. On December 17, 2009, the Texas court handling this matter
granted CEMEX’s motion for summary judgment finding that the GLO’s claims had no merit. The GLO filed an appeal on
March 25, 2010 and its appellate brief on May 28, 2010. The GLO requested that the Texas Court of Appeals hear oral
arguments in this matter. On May 3, 2011, the GLO and CEMEX submitted briefs and the Court of Appeals heard oral
arguments on this matter. On August 31, 2011, the El Paso Court of Appeals reversed the trial court’s judgment and
rendered judgment in favor of the State of Texas with respect to the ownership of the mineral rights on the lands mined by
CEMEX and its predecessors in interest. On February 23, 2012, the GLO and CEMEX entered into an agreement to settle all
claims, including claims for past royalties, without any admission of liability by CEMEX. Pursuant to the settlement, CEMEX
will pay 750 thousand dollars in five equal installments of 150 thousand per year and will enter into a royalty mining lease
at the royalty rate required by the Texas Natural Resources Code on a going forward basis, beginning in September 2012.
Further, CEMEX’s pending appeal to the Texas Supreme Court has been withdrawn and all ancillary claims that were held in
abeyance have been dismissed.