Cemex 2013 Annual Report Download - page 118

Notes to the consolidated financial statements
24) Contingencies
24A) Provisions resulting from legal proceedings
CEMEXisinvolvedinvarioussignicantlegalproceedings,inadditiontothoserelatedtoincometaxmatters(note19D),theresolutionsof
whicharedeemedprobableandimplycashoutowsorthedeliveryofotherresourcesownedbyCEMEX.Asaresult,certainprovisionshave
beenrecognizedinthenancialstatements,representingthebestestimateoftheamountspayable.Therefore,CEMEXbelievesthatitwill
notincursignicantexpenditureinexcessoftheamountsrecorded.AsofDecember31,2013,thedetailsofthemostsignicanteventsare
asfollows:
• InJanuary2007,thePolishCompetitionandConsumersProtectionOfce(the“ProtectionOfce”)notiedCEMEXPolska,asubsidiary
inPoland,abouttheinitiationofanantitrustproceedingagainstallcementproducersinthecountry,includingCEMEXPolskaandanother
ofCEMEX’sindirectsubsidiariesinPoland.TheProtectionOfceallegedthattherewasanagreementbetweenallcementproducersin
Polandregardingprices,marketquotasandothersalesconditionsofcement,andthattheproducersexchangedcondentialinformation,
allofwhichlimitedcompetitioninthePolishcementmarket.InJanuary2007,CEMEXPolskaleditsresponsetothenotication,
denyingthatithadcommittedthepracticeslistedbytheProtectionOfce,andsubmittedformalcommentsandobjectionsgathered
duringtheproceeding,aswellasfactssupportingitspositionthatitsactivitieswereinlinewithPolishcompetitionlaw.InDecember
2009,theProtectionOfceissuedaresolutionimposingnesonanumberofPolishcementproducers,includingCEMEXPolskaforthe
periodof1998to2006.TheneimposedonCEMEXPolskaamountedtoapproximately116millionPolishZloty(US$38or$502),
whichrepresents10%ofCEMEXPolska’stotalrevenueforthecalendaryearprecedingtheimpositionofthene.OnDecember23,
2009,CEMEXPolskaledanappealbeforethePolishCourtofCompetitionandConsumerProtectioninWarsaw(the“FirstInstance
Court”).Afteraseriesofhearings,onDecember13,2013,theFirstInstanceCourtissueditsjudgmentinregardswiththeappealsled
byCEMEXPolskaandothercementproducers,whichwerepreviouslycombinedintoajointappeal.TheFirstInstanceCourtreduced
thepenaltyimposedonCEMEXPolskatoapproximatelyPolishZlotys93.89million(approximatelyU.S.$31.15millionbasedonan
exchangerateofPolishZloty3.0142toU.S.$1.00asofDecember31,2013)whichisequalto8.125%ofCEMEXPolska’srevenue
in2008.OnDecember20,2013,CEMEXPolskarequestedtheFirstInstanceCourttodeliveritsjudgmentwithawrittenjustication.
AfterreceptionofthewrittenjusticationCEMEXPolskaintendstoappealtheFirstInstanceCourtjudgmentbeforetheAppealsCourt
inWarsaw.TheabovementionedpenaltyisenforceableuntiltheAppealsCourtissuesitsnaljudgment.AsofDecember31,2013,
CEMEXrecognizedaprovisionofapproximately93.89millionPolishZloty(US$31or$406),representingthebestestimateonsuch
dateoftheexpectedcashoutowinconnectionwiththisresolution.AsofDecember31,2013,CEMEXdoesnotexpectthismatter
wouldhaveamaterialadverseimpactonitsresultsofoperations,liquidityornancialcondition.
• InAugust2005,CartelDamagesClaims,S.A.(“CDC”),ledalawsuitintheDistrictCourtinDüsseldorf,Germany,againstCEMEX
DeutschlandAG,CEMEX’ssubsidiaryinGermany,andotherGermancementcompaniesoriginallyseekingapproximately€102(US$140
or$1,831)inrespectofdamageclaimsrelatingtoallegedpriceandquotaxingbyGermancementcompaniesbetween1993and
2002.Sincethattime,CDChasacquirednewclaimsbyassignment,andtheclaimhasincreasedto€131(US$180or$2,352).CDC
isaBelgiancompanyestablishedintheaftermathoftheGermancementcartelinvestigationthattookplacefromJuly2002toApril
2003byGermany’sFederalCartelOfce,withthepurposeofpurchasingpotentialdamageclaimsfromcementconsumersandpursuing
thoseclaimsagainstthecartelparticipants.InFebruary2007,theDistrictCourtinDüsseldorfallowedthislawsuittoproceedwithout
goingintothemeritsof thiscasebyissuinganinterlocutory judgment.Alldefendantsappealedthe resolutionbuttheappealwas
dismissedinMay2008.OnMarch1,2012,theDistrictCourtinDüsseldorfrevealedseveralpreliminaryconsiderationsonrelevant
legalquestionsandallowedthepartiestosubmittheirpleaandreply.Afterseveralcourthearings,onDecember17,2013theDistrict
CourtinDüsseldorfissuedadecisiononclosingtherstinstance.Bythisdecision,allclaimsbroughttocourtbyCDCweredismissed.
CDCmayleanappealagainstthisdecisionbeforetheHigherRegionalCourtinDüsseldorf,Germany.Thecourtheldthattheway
CDCobtainedtheclaimsfrom36cementpurchaserswasillegalgiventhelimitedriskitfacedforcoveringthelitigationcosts.The
acquisitionoftheclaimsalsobreachedrulesthatmaketheprovisionoflegaladvicesubjecttopublicauthorization.AsofDecember
31,2013,CEMEXisunabletoassessthelikelihoodofanadverseresultfromanyappealtheCDCmayleand,becauseofthenumber
ofdefendants,thepotentialdamagesthatwouldbebornebyCEMEX;however,ifthenaldecisionisadversetoCEMEX,itcouldhave
amaterialadverseimpactonitsresultsofoperations,liquidityornancialcondition.AsofDecember31,2013,CEMEXDeutschland
AGhadaccruedliabilitiesregardingthismatterofapproximately€28(US$39or$503),includingaccruedinterestsovertheprincipal
amountoftheclaim.
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