Cemex 2012 Annual Report Download - page 110

Notes to the
consolidated
financial
statements
110
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24) Contingencies
24A) Provisions resulting from legal proceedings
CEMEX is involved in various significant legal proceedings, other than tax related matters which are detailed in note 19D, the
resolutions of which are deemed probable and imply cash outflows or the delivery of other resources owned by CEMEX. As a
result, certain provisions have been recognized in the financial statements, representing the best estimate of the amounts payable.
Therefore, CEMEX believes that it will not incur significant expenditure in excess of the amounts recorded.
As of December 31, 2012, the details of the most significant legal proceedings that have required the recognition of certain
provisions are as follows:
• In January 2007, the Polish Competition and Consumers Protection Oce (the “Protection Oce”) notified 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 O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 confidential information, all of which limited competition in the Polish cement market.
In January 2007, CEMEX Polska filed its response to the notification, denying that it had committed the practices listed
by the Protection O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 Oce
issued a resolution imposing fines on a number of Polish cement producers, including CEMEX Polska for the period of 1998
to 2006. The fine imposed on CEMEX Polska amounted to approximately 116 million Polish Zloty (US$34 or $437), which
represents 10% of CEMEX Polska’s total revenue for the calendar year preceding the imposition of the fine. CEMEX Polska
filed an appeal before the Polish Court of Competition and Consumer Protection (the “Court of Consumer Protection”). On
February 7, 2011, the Protection Oce made an application to the Court of Consumer Protection to reject CEMEX Polska’s
appeal, arguing that such appeal is not justified, and the Protection Oce maintained all the statements and arguments
from its prior decision. On February 21, 2011, CEMEX Polska sent a letter to the Court of Consumer Protection in which it
kept its position and argumentation from the appeal and opposed the arguments and statements of the Protection Oce.
The decision on the fines will not be enforced until two appeals are exhausted, which CEMEX estimates could take until the
end of 2014 to be resolved. As of December 31, 2012, CEMEX recognized a provision of approximately 75 million Polish
Zloty (US$24 or $308), representing the best estimate on such date of the expected cash outflow in connection with this
resolution. The hearing of this case is scheduled to take place on February 19, 2013.
• CEMEX has environmental remediation liabilities in the United Kingdom pertaining to closed and current landfill sites for
the confinement of waste. As of December 31, 2012, CEMEX had generated a provision for the net present value of such
obligations of approximately £131 (US$214 or $2,745). Expenditure was assessed and quantified over the period in which
the sites have the potential to cause environmental harm, which was accepted by the regulator as being up to 60 years
from the date of closure. The assessed expenditure included the costs of monitoring the sites and the installation, repair and
renewal of environmental infrastructure.
• In August 2005, Cartel Damages Claims, S.A. (“CDC”), filed 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$132 or $1,696) in respect of damage claims by 28 entities relating to alleged price and quota
fixing 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$170 or $2,185). 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 O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 and the lawsuit will proceed at the level of the court of first instance. 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. A new hearing has been rescheduled to June 6, 2013 to allow plaintiff to prepare and submit their plea. As of
December 31, 2012, CEMEX Deutschland AG had accrued liabilities regarding this matter of approximately €28 (US$36 or
$463), including accrued interests over the principal amount of the claim.