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Lafarge/Tarmac merger may be 'unfair', says commission

The Competition Commission (CC) said today it has a “number of concerns” over the proposed merger between materials firm Tarmac and French rival Lafarge.

CC is concerned about the two firms’ “overlapping activities” in the production and supply of cement, aggregates, asphalt and ready-mix concrete used in a variety of construction projects. As a result the merger could lead to “substantial lessening of competition” in these markets.

CC chairman of the Anglo/Lafarge inquiry Roger Witcomb said there is already concern that with just four UK producers of bulk cement in the UK the market is “not as competitive as it could be”, particularly as demand has fallen over the past few years.

Tarmac owner Anglo American and Lafarge announced plans to merge last year. The two businesses recorded combined sales of £1.8bn in 2010 and are expected to generate cost savings of at least £60M a year from the proposed tie-up.

Witcomb added that this is a “particularly complex” investigation because both firms offer a number of different products which can be used in a number of different ways. A final report is due to be published on 1 May.

Summary of CC’s concerns

  • Supply of bulk cement
  • Supply of rail ballast
  • Supply of high purity limestone when used for flue gas in coal fired-power stations
  • Supply of primary aggregates for construction applications in 23 local markets
  • Supply of asphalt in two local markets
  • Supply of ready-mix concrete in seven local markets

 

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