OFT concerned over lack of competition in aggregate, cement and concrete sectors

The OFT has called on the Competition Commission to investigate anti-competitive practices in the concrete, cement and aggregate industry.

The proposal follows an OFT report that unearthed practices that could prevent, distort or restrict competition.

The OFT said it had heard complaints that smaller players were being priced out of the market.

The report revealed that while cement costs were rising concrete prices were plateauing or falling, causing independent operators to be squeezed in the middle.

John Fingleton, OFT chief executive, said: ’We are concerned that competition is not working well in these sectors, with underlying features of the market giving rise to persistent concerns.”

The issues

• High barriers to entry in aggregates and cement due to the difficulty of obtaining planning permission and investment required
• High and increasing concentration: five major players account for over 90% of the cement market, 75% of aggregates sales and 68% of ready-mix production
• The effects of vertical integration: the major firms are integrated across aggregates, ready-mix concrete and cement. We have received complaints about vertically integrated firms refusing to supply or discriminating against non-integrated competitors through their pricing
• Multiple contacts and information exchanges across the markets, with major firms supplying each other with both aggregates and cement, and engaging in joint-ventures and asset swaps