The Competition and Markets Authority (CMA) has said it will refer Breedon’s anticipated acquisition of Hope for an in-depth investigation unless it is given acceptable reassurances that the move won’t lead to a price hike.
Although the majority of the plans for the £336M acquisition of Hope Construction Materials by Breedon Aggregates, announced last November, cause the CMA no concern, it said it has competition concerns in relation to 27 ready-mix concrete sites, meaning that customers might face higher prices as a result of the merger in the local area.
CMA senior director of mergers and decision-maker in the initial investigation Sheldon Mills said: “Ready-mixed concrete is an essential product for a wide range of construction projects of all sizes in the public and private sectors. The vast majority of the merger raises no concerns but there are a number of areas where the companies compete strongly with each other for customers and the concern is that the loss of such rivalry could lead to price rises for customers. The businesses may now resolve these concerns or face a detailed investigation.”
Breedon has until next Tuesday to offer undertakings to the CMA regarding the concerns. If no undertakings are offered and accepted, then the CMA will refer the merger.
In a statement responding to the CMA announcement, Breedon said: “Breedon notes the announcement today by the Competition and Markets Authority that it has completed its Phase 1 review of Breedon’s proposed acquisition of Hope Construction Materials and that it has concluded there is a realistic prospect of a substantial lessening of competition in a limited number of local ready-mixed concrete markets in England and Scotland.
“This outcome is in line with Breedon’s expectations and the company now has a short period during which to offer remedies to address the CMA’s outstanding concerns. Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later this summer in line with previous guidance.”