Competition Commission says merger could seriously damage competition

A proposed joint venture between Anglo American’s UK subisidiary Tarmac and French giant Lafarge could seriously damage competition within the construction-materials business, the Competition Commission has warned.

The 50:50 deal “raised a number of concerns” said inquiry group chair Roger Witcomb in a preliminary report, signalling that the deal could be vetoed altogether or subjected to dramatic limitations.

Mr Witcomb said there were currently only four UK producers of bulk cement and that there was already “evidence the market is not as competitive as it could be”.

His group’s report said the proposed merger could affect the supply of bulk cement, rail ballast, high-purity limestone, primary aggregates, asphalt and ready-mix concrete if allowed to go ahead.

Mr Witcomb said that while his panel had not reached a view on whether there was “co-ordination” in the bulk cement market, prices and profit margins did not appear to have been affected in the way that would have been expected following big falls in demand in recent years.

“We are concerned that the proposed tie-up would increase the susceptibility of this market to co-ordination,” he said.

The commission has published a preliminary selection of proposed remedies - attached - to the anti-competitive issues it identified, ranging from full prohibition to prescribing what markets any joint venture could be permitted to operate in.

It is out to consultation until March 6.