Materials industry faces Competition Commission probe into business practices in the UK

The Office of Fair Trading has confirmed it is to refer the aggregates, cement and ready-mix concrete markets for investigation by the Competition Commission.

Competition regulator the OFT said it had decided to refer the markets for investigation following a consultation with the industry in the autumn.

It said it had “reasonable grounds for suspecting” that “structural features of these markets” were “preventing, restricting or distorting competition”.

However, following the OFT’s consultation on its intention to refer the industries to the Competition Commission in August last year, it said it had decided to exempt the markets in Northern Ireland from the probe. It said the fact that five major players make up the bulk of the market, are vertically integrated, and the size of barriers to entry in to the market, all have the potential to distort competition.

In a statement the OFT said: “The effect in the long-term could be […] higher prices for aggregates, cement and ready-mix concrete.”

Unlike the OFT, the Competition Commission has the power to force companies to divulge information, and can recommend that firms be broken up if deemed necessary.

The Competition Commission is already examining the proposed merger between Anglo American (which owns Tarmac) and La Farge, and the aggregates industry as a whole has been subject to an aggressive anti-trust probe by the European Commission.

John Fingleton, OFT chief executive, said: “The aggregates, cement and ready-mix concrete markets are part of the larger construction industry which provides vital inputs across the British economy.

“Following public consultation, we continue to have concerns that these markets are not working well. As a result we are referring them to the Competition Commission for further investigation.”