Tarmac and Lafarge merger ruled anti-competitive

Grant Prior 10 years ago
Share

The Competition Commission has provisionally ruled that the proposed joint venture between Tarmac owner Anglo American and Lafarge could damage competition in the construction materials market.

Anglo American, through its UK subsidiary Tarmac, and Lafarge want to establish a 50:50 joint venture in this country.

But the commission’s provisional findings are that the merger could lead to a substantial lessening of competition in the markets for:

  • the supply of bulk cement;
  • the supply of rail ballast;
  • the supply of high purity limestone, when used for flue gas desulphurization
  • the supply of primary aggregates for construction applications in 23 local markets;
  • the supply of asphalt in two local markets; and
  • the supply of readymix in seven local markets.

Chairman of the Anglo/Lafarge Inquiry Group, Roger Witcomb, said: “We have a number of concerns about this joint venture.

“In bulk cement there are currently only four UK producers, and there is evidence that the market is not as competitive as it could be.

“Prices and profit margins haven’t been affected in the way we would have expected following the big falls in the demand for cement in the past few years.

“We have not reached a view on whether or not there has been coordination in the bulk cement market. But we are concerned that the proposed tie-up would increase the susceptibility of this market to coordination.

“Some of the reasons for this arise from the proposed combination of the cement businesses and some from the increased vertical integration that would result from the combination of their RMX businesses. Lafarge currently has a relatively small RMX business, while Tarmac has a relatively large one.

“This is a particularly complex investigation because of the number of different products, the varying degrees of substitutability between them, and the fact that cement is an input into RMX and aggregates are an input into both RMX and asphalt.

“In addition, for aggregates used in general construction applications markets are quite localized as a result of high transport costs compared with product value. The markets for asphalt and RMX are also localized, but for them the issue is perishability.

“We have therefore had to examine competitive conditions in a large number of local markets for these products in coming to our view on the likely effect of the proposed joint venture on competition.

“We are now consulting on the possible actions we could take in response to the reductions in competition we have found, bearing in mind the close links that exist between the different product markets.”

Latest news

50 firms win £3.6bn National Highways renewals deal

Morgan Sindall, Eurovia and Osborne win super regions civils
2 days ago

McLaren wins new Aston Martin F1 factory race

£200m development near Silverstone will take 18 months to complete
1 day ago

Kent Council seeks four partners for £500m pipeline

Council drops 17-supplier framework to partner with just four contractors
1 day ago

Robertson set to seal £150m Cardiff Arena deal

Cabinet to sign off contractor and business case for construction start next spring
1 day ago

VolkerFitzpatrick wins £82m Hull turbine blades factory

Deal to upgrade and build two more factories follows on from job five years ago
1 day ago

Lorne Stewart battles to return to profit

Harrow-based M&E group begins to curb losses
1 day ago

Henry Construction to build £32m Ealing resi scheme

Financing deal paves way for start on 14-storey scheme
2 days ago

Kier returns to profit after two-year turnaround

Contractor makes £5.6m after £225.3m loss last time
2 days ago

Galliford Try returns to profit with margin at 2%

Order book swells to £3.3bn with 90% of work in place for 2022
2 days ago

Fire hits £120m Tolent Milburngate site

Blaze breaks out behind cavity wall as site evacuated
2 days ago

Roof tile maker Marley to float on stock market

Private equity firm unveils plan to take Britain's largest roof tile maker public
2 days ago

Plans in for Lancashire 1,700 inmate prison

Seven houseblock HMP Wymott 2 planned near Leyland
2 days ago

Michael Gove named new housing secretary

Gove replaces Robert Jenrick in Cabinet reshuffle
3 days ago

Redrow happy for staff to keep working from home

House builder says staff can work "where they are most efficient"
3 days ago

Cleveland Bridge UK collapsed owing over £21m

Estimation error on £11m job, Covid costs and an overseas coup left firm needing £12m to trade
3 days ago

Construction job vacancies soar to record high

Unfilled jobs soar to 37,000, equating to 2.4 vacancies for every 100 jobs
3 days ago

BAM Nuttall chief to exit after 16 months in role

Major projects chief Ian Parish to step up as interim MD
4 days ago

Subbies and suppliers owed £18.7m by WRW

Administrators reveal scale of debts at failed Welsh contractor
3 days ago

Crane company boss killed by falling load

Crane company owner crushed during delivery
4 days ago

Aberla lands £20m package at Viadux in Manchester

M&E specialist to start latest scheme with Domis Construction next month
4 days ago

Former Dunne concrete boss charged

Gordon Dunne and his wife Johanna facing charges of financial irregularities
4 days ago

RED hires Midas director for south west expansion

London contractor sets up Bristol office with Derek Quinn at the helm
4 days ago

Weston launches light-gauge steel panel housing system

New British Offsite business has capacity to delivery 4,000 homes a year
4 days ago

Balfour builds UK’s first T-pylons for Hinkley

First newly designed pylon in nearly 100 years erected in £900m hook-up project
4 days ago

Jetpack launched for hard-to-reach construction sites

Star Wars technology hopes to see site professionals flying off to make building inspections
5 days ago

North East contractors to hold materials shortage summit

Regional firms come together to tackle crisis
4 days ago

Green light for Teesside wind turbine factory

Construction to begin later this year of 800,000 sq ft turbine blade plant
5 days ago

Shepherd counts cost of construction exit six years on

Construction arm records £31m loss from legacy construction project and cladding liabilities
5 days ago

Infrastructure record spend to support 425,000 jobs a year

Government details £30bn of planned procurements over the next 12 months
5 days ago

L&G modular homes losses to date reach £137m

Accumulated losses build but first modular schemes finally start construction
5 days ago

Contractor services