According to the UK-based Builders Merchants Journal, the Office of Fair Trading (OFT) has referred a proposed UK construction materials joint venture between Tarmac UK parent company Anglo American and Lafarge to the Competition Commission. The parties propose to establish a 50-50 joint venture to which each of them would contribute the bulk of their construction materials businesses in the United Kingdom.
The proposed joint venture involves overlaps between activities in a number of product markets, at local, regional and national level. In addition, there are vertical supply relationships between the parties that could have an impact on the ability of suppliers to compete. The OFT received information from around 300 customers and competitors of the two parties as part of its investigation and concluded that competition concerns arise in a number of markets that justify referral to the Competition Commission.
These are:
- Overlaps in the supply of aggregates, asphalt and ready-mixed in a large number of local areas;
- An overlap in the supply of bulk cement at a regional and/or national level, as well as, an increased prospect of coordination in the supply of bulk grey cement; and,
- A concern that the joint venture could foreclose independent ready-mixed suppliers by making it substantially more difficult for them to source bulk cement at competitive prices.
The Competition Commission is expected to report on the case by February 16, 2012.
In August, the Competition Commission announced an inquiry into the £3.4 billion cement and aggregates sector, amid concerns that the dominance of the big players is raising prices and making it difficult for new entrants to join the market. Five companies—Lafarge, Holcim, Heidelberg, Cemex and Anglo American—account for more than 90% of the cement market, 75% of aggregates sales, and 70% of ready-mixed production in the UK.
