Competition Commission invites evidence

Detailed investigation of proposed Anglo American/Lafarge UK joint venture gets under way

THE Competition Commission has invited evidence from all interested parties on the proposed UK construction materials joint venture between Anglo American plc and Lafarge SA, following last week’s decision by the Office of Fair Trading (OFT) to refer the proposal to the Commission for further investigation.

Anglo American, through their UK subsidiary, Tarmac Ltd, and Lafarge are proposing the establishment of a 50:50 joint venture to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the UK.

According to the OFT, to whom the proposal was referred for regulatory approval earlier this year, the joint venture would involve overlaps between the two parties’ activities in a number of product markets, at local, regional and national levels, as well as vertical supply relationships between the parties’ activities that could impact on the ability of suppliers in certain markets to compete.

The OFT has therefore asked the Competition Commission to conduct a more detailed analysis of the proposal and to decide whether it may be expected to result in a substantial lessening of competition in any market or markets for construction material goods and services in the UK.

The key areas of concern are said to be: overlaps in the supply of aggregates, asphalt and ready-mixed concrete in a large number of local areas; an overlap in the supply of bulk grey cement at a regional and/or national level; and worries that the joint venture could foreclose independent ready-mixed concrete suppliers by making it substantially more difficult for them to source bulk grey cement at competitive prices.

The Competition Commission now has a 24-week period in which to publish its findings and is expected to report by 16 February 2012. This could be extended by up to eight weeks if the Commission considers there are special reasons why the report cannot be published within that period.

In a statement on the OFT’s referral, Anglo American said: ‘This marks the next stage in the regulatory process and in no way pre-judges the outcome. We will work with the Competition Commission with the aim of achieving clearance for the joint venture as soon as possible.

‘The joint venture remains an exciting opportunity to create a leading UK construction materials company, with a portfolio of high-quality assets drawing on the complementary geographical distribution of operations and assets, the skills of the two experienced management teams, and a portfolio of well-known and innovative brands.

‘In the meantime, both Tarmac and Lafarge will continue to operate as independent businesses in the UK.’