Cemex 2012 Annual Report Download - page 114

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Notes to the
consolidated
financial
statements
114
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• In January and March 2009, one of CEMEX’s subsidiaries in Mexico was notified of two findings issued by the Mexican
Competition Authority (Comisión Federal de Competencia or “CFC”), for presumptive violations of Mexican antitrust laws.
During the CFC investigation, CEMEX filed constitutional challenges for both cases considering that these findings contain
substantial violations of rights granted by the Mexican Constitution. In both challenges, the Circuit Courts resolved that
CEMEX lacked standing since the notice of presumptive responsibility did not affect any of CEMEX’s rights. CEMEX appealed
such resolutions. On October 14, 2011, the CFC determined to close one of the cases due to a lack of evidence to impose
any sanctions. Third parties subsequently filed an appeal before the CFC to reconsider its ruling, but CEMEX believes that
legal precedent exists that establishes that third parties lack standing in these cases. On February 14, 2012, CEMEX was
fined approximately $10.2 million for anticompetitive practices and was ordered to implement certain measures. CEMEX has
appealed the resolution before the CFC and the Circuit Court and denies any wrongdoing. In June 2012, the CFC confirmed
its resolution. As a result, in July 2012, CEMEX filed a constitutional challenge and simultaneously filed a claim against
the CFC’s resolution before the Circuit Court, which nullified the fine imposed on CEMEX. On December 18, 2012, the CFC
ratified its resolution, which CEMEX expects to appeal. As of December 31, 2012, a resolution regarding the constitutional
challenge has not been issued.
• In January 2009, in response to litigation brought by environmental groups concerning the manner in which certain federal
quarry permits were granted, a judge from the U.S. District Court for the Southern District of Florida ordered the withdrawal
of the federal quarry permits of CEMEX’s SCL, FEC and Kendall Krome quarries, in the Lake Belt area in South Florida, which
were granted in 2002 to CEMEX Construction Materials Florida, LLC (“CEMEX Florida”), one of CEMEX’s subsidiaries in
the United States. The judge ruled that there were deficiencies in the procedures and analysis undertaken by the relevant
governmental agencies involved with the issuance of the permits. On January 29, 2010, in connection with the withdrawal
of federal quarry permits in Lake Belt, Florida, the Army Corps of Engineers concluded a revision and determined procedures
for granting new federal quarry permits in the area. During February 2010, new quarry permits were granted to the SCL
and FEC quarries. However, at December 31, 2012, a number of potential environmental impacts must be addressed at the
wetlands located at the Kendall Krome site before a new federal quarry permit may be issued for mining at that quarry. If
CEMEX Florida were unable to maintain the new Lake Belt permits, CEMEX Florida would need to source aggregates, to the
extent available, from other locations in Florida or import aggregates. The cessation or significant restriction of quarrying
operations in the Lake Belt area could have a significant adverse effect on CEMEX’s Florida operating results.
• In November 2008, AMEC/Zachry, the general contractor for CEMEX’s expansion program in Brooksville, Florida, filed a
lawsuit against CEMEX Florida in the United States, alleging delay damages and seeking an equitable adjustment to the
contract and payment of change orders. In its claim, AMEC/Zachry sought indemnity for US$60 ($771). During 2009,
FLSmidth (“FLS”), a supplier for the mining and cement industry, became a co-defendant in the lawsuit. During 2009 and
2010, CEMEX filed counterclaims against both suppliers. On November 18, 2010, the court denied AMEC/Zachry’s motion
to dismiss against CEMEX Florida, and denied FLS’s motion on the pleading against CEMEX Florida. On January 6, 2011,
CEMEX Florida amended its pleadings in accordance with the court’s rulings. On March 17, 2011, FLS filed another motion
seeking dismissal of one of CEMEX Florida’s new claims asserted in the amended pleading. The parties have exchanged
documents, and depositions are scheduled for the next several months. On July 1, 2011, AMEC/Zachry filed a motion for
substitution of counsel and a motion for a limited stay of discovery proceedings. As of December 31, 2012, the parties to this
proceeding finalized the terms and conditions of a settlement. The settlement of this matter will not have a material adverse
effect on CEMEX’s liquidity and financial position.