Competition fears over Breedon’s £178m Cemex deal

Aaron Morby 4 years ago
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The competition watchdog has red-flagged Breedon’s £178m deal to buy around 100 Cemex sites around the UK.

Materials producers given five days to answer concerns about competition in 15 local UK markets
Materials producers given five days to answer concerns about competition in 15 local UK markets

The Competition and Markets Authority said the deal could result in a substantial lessening of competition, leading to higher prices and lower quality building materials for UK construction projects.

Investigators said they were concerned about the supply of ready-mixed concrete, non-specialist aggregates or asphalt in 15 local markets across the UK.

In all of these local markets, the two firms currently have a large presence and compete closely, with limited competition from other suppliers.

The CMA has also found that the merger could make it easier for cement suppliers in the East of Scotland to align their behaviour, without necessarily entering into any express agreement or direct communication, in a way that limits the rivalry between them.

The CMA found that this could result in cement suppliers competing less strongly for certain customers in the region.

 

Breedon announced last January that it had agreed a £178m deal to buy approximately 100 Cemex sites, including aggregates quarries, ready-mixed concrete facilities, asphalt plants and a cement terminal, across the UK.

Colin Raftery, CMA senior director, said: “While sufficient competition will remain in most areas, we are concerned that the deal could result in high prices and lower quality products in some areas where Breedon wouldn’t face sufficient competition.”

Breedon and Cemex must now address these concerns within five working days.

If they are unable to do so, the merger will be referred for an in-depth Phase 2 investigation.

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