The Competition Commission has ruled that Tarmac owner Anglo American and Lafarge must sell a large chunk of their operations before a proposed joint venture in the UK can go ahead.
The decision will see increased competition in the asphalt and aggregates market as the industry giants are forced to sell of a number of operations.
The move will see another major player enter the domestic cement market to head-off price rise fears due to lack of competition.
The commission first raised concerns about the joint venture plans earlier this year.
It said today that the joint venture “would increase the danger of coordination in the market for bulk cement and would reduce competition in local and national markets for other products including aggregates, asphalt and ready-mix concrete (RMX).”
Tarmac and Lafarge will now be required to sell a swathe of their operations including:
- a cement plant in Hope, Derbyshire as well as the nearby Dowlow quarry and three linked rail depots;
- a substantial network of RMX plants, representing well over half of the proposed joint venture’s RMX capacity;
- six aggregate quarries as well as Tarmac’s share of two quarries owned through its Midlands Quarry Products (MQP) joint venture with Hanson—and one rail depot; and
- two asphalt plants as well as Tarmac’s share of five plants owned through MQP.
It is envisaged that the Hope plant and supporting operations including the Dowlow quarry and a substantial network of RMX plants will go to a single buyer.
This sale will have to be completed before the joint venture can go ahead.
Chairman of the Anglo/Lafarge Inquiry Group, Roger Witcomb, 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.
“The disposals will also remedy the loss of competition for the supply of RMX, aggregates and asphalt in particular areas of the country, given that the markets for these materials are quite localized.
“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.”