Competition Commission rules firms must sell off quarries and plants before joint venture is given green light
Aggregates firms Lafarge and Tarmac will be forced to sell off multiple processing plants and quarries before they are allowed to start a massive aggregates joint venture, the Competition Commission has ruled.
The merger of the two companies’ aggregates businesses is expected to form a firm with a turnover of around £2bn.
But the Competition Commission said the joint venture would increase the danger of coordination in the bulk cement market and reduce competition in the aggregates and asphalt markets.
Roger Witcomb, chair of the inquiry group, said: “A large-scale disposal like this is the only way to get a new entrant of sufficient scale to break into the UK cement market and thereby ensure that this joint venture does not damage competition.”
“In bulk cement, there are currently only four UK producers and there is evidence that competition is not as effective as it could be. So, if the joint venture is to go ahead, it is essential to maintain the number of cement producers by bringing in a new player.”
The firms will have to sell a cement plant, four rail depots, seven quarries, two asphalt plants and Tarmac’s shares in two other quarries and five asphalt plants.
It will also have to dispose of over half of its network of ready-mix concrete plants.
Witcomb added: “We believe that these extensive sales will help protect all customers’ interests in these key markets, which is particularly important when one considers how much construction work is funded by the public purse.”