Breedon may face site sales in three areas

Competition Commission may require company to sell asphalt and ready-mix sites in north-east Scotland

BREEDON Aggregates Ltd may have to sell asphalt and ready-mixed concrete operations in three areas of north-east Scotland after the Competition Commission (CC) provisionally found that some customers could face higher prices following Breedon’s acquisition of a package of assets from Aggregate Industries UK Ltd.

The acquisition, which was completed in April 2013, included 11 aggregates quarries, four asphalt plants, nine ready-mixed concrete plants and two concrete block factories, located at 18 sites in north Scotland. Prior to the acquisition Breedon were the largest suppliers of these products in north-east Scotland.

In a summary of its provisional findings published today, the CC states that Breedon and Aggregate Industries were previously competitors for many of these products across north-east Scotland, and that asphalt customers in Aberdeen and Inverness, as well as ready-mixed concrete customers in Peterhead, could face higher prices due to the loss of competition and lack of alternative suppliers.

The CC has also today published a notice of possible remedies to address the anti-competitive effects of the merger, which indicates that Breedon may have to sell a ready-mixed concrete plant in the Peterhead area and an asphalt plant in the Aberdeen area to a competitor approved by the CC, and may also need to give undertakings in respect of an asphalt plant in the Inverness area.

Simon Polito (pictured), deputy chairman of the CC and chairman of the Inquiry Group, said: ‘The nature of these products means the markets are local – they are expensive to transport and, additionally, ready-mixed concrete has a short shelf life. So, the loss of a competitor in even a relatively small area matters when the cost and proximity of the production site are the most important factors for customers and in a market where most prices are negotiated.

‘We now want to look in detail at what measures will protect the interests of customers. This is likely to involve the sale of asphalt and ready-mixed concrete sites in the affected areas.’

Breedon have 21 days to respond to the provisional findings and the company has today said it will be discussing arrangements for the possible disposals with the CC, after which it will seek to expedite the sale of such assets as may be required in order to minimize disruption and secure the future of the small number of employees affected.

The CC is required to publish its final report by 5 May 2014.