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OFT probes Tarmac's merger with Lafarge

The Office of Fair Trading (OFT) has referred merger plans by Tarmac owner Anglo American and France’s Lafarge to the Competition Commission today.

Anglo American and Lafarge plan to merge their UK businesses. According to the OFT, the proposed joint venture overlaps a number of product markets at local, regional and national level and could prevent independent concrete suppliers competing. 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.

“The proposed joint venture would bring together Tarmac’s and Lafarge’s construction material assets in the UK,” said OFT senior director and decision maker in this case Ali Nikpay. “This represents a significant structural change in this sector and raises serious competition issues in several markets which need to be considered in detail by the Competition Commission.”

An Anglo American spokesman said until the review is completed both Tarmac UK and Lafarge UK operations will continue to operate independently. “We note the OFT’s decision to refer the proposed 50:50 joint venture to combine the assets of Tarmac UK and Lafarge UK for review by the Competition Commission,” said the spokesman.

Anglo American/Lafarge investigation

The Competition Commission will probe:

  1. overlaps in the supply of aggregates, asphalt and ready-mixed concrete in a large number of local areas (as well as particular types of aggregates at regional and national level)
  2. an overlap in the supply of bulk grey cement at a regional and/or national level, as well as, separately, an increased prospect of coordination in the supply of bulk grey cement;
  3. a concern that the joint venture could foreclose independent ready-mix concrete suppliers by making it substantially more difficult for them to source bulk grey cement at competitive prices.

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