The watchdog believes a new entrant will raise competition and drive down prices.
It estimates that higher prices resulting from this lack of competition costs construction at least £30m a year for cement and a further £15-£20m for pulverised fuel ash.
New measures include plans to curb the flow of industry information about price increase and cement production.
Competition chiefs gave the aggregates or ready mixed concrete markets a clean bill of health.
In its final report into the market for aggregates, cement and ready-mix concrete, the Commission has said that it will require Lafarge Tarmac to sell a cement plant and some reday-mix plants to allow a new producer in.
It also aims to raise competition for ground granulated blast furnace slag by requiring Hanson to sell one of its pulverised fuel ash production facilities.
Professor Martin Cave, deputy chairman and chairman of the CC inquiry group, said: “We believe that the entry of a new, independent cement producer is the only way to disturb the established structure and behaviour in this market which has persisted for a number of years and led to higher prices for customers.
“Despite falling demand and increasing costs during the last few years, profitability among GB producers has been sustained and their respective markets shares have changed little.
“This is not what you would expect to see in a well-functioning market, under these circumstances.”
The measures follow a two-year probe that found that both structure and conduct in the cement sector restricted competition by aiding coordination between the three largest producers – Lafarge Tarmac, Cemex and Hanson.
It said these producers have refrained from competing vigorously with each other by focusing on maintaining market stability and their respective shares.
Aggregate Industries looks like the most likely candidate to enter the cement market, after revealing plans two years ago to become a major player in the UK.
Ruling
- Lafarge Tarmac will be required to choose between divesting either its Cauldon or its Tunstead cement plant. The buyer will also be able to acquire several ready-mixed concrete plants from Lafarge Tarmac . The buyer cannot be one of the UK’s existing cement producers.
- Restrictions on the publication of cement market data. Publication of cement production data will be delayed by at least three months.
- GB cement suppliers will be prohibited from sending generic price announcement letters to their customers. Instead, any future price announcement letters will have to be specific and relevant to the customers receiving them.
- Hanson will be required to divest one of its GGBS production facilities and Lafarge Tarmac will be required to enter into a long-term agreement to supply GBS to the acquirer of the GGBS production facility. The buyer will have to be approved by the CC and cannot be a GB cement producer.
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