The UK’s competition watchdog is planning to dig deeper into a massive deal in the concrete sector, saying it could block customers from accessing the best deals.
The Competition and Markets Authority said that if Breedon’s acquisition of quarries and concrete mixing sites from Cemex goes ahead, customers in 15 areas of the UK might find that competition to win their business drops.
The CMA said it is planning to refer the investigation to a phase two probe unless the businesses can allay its fears by next Wednesday.
CMA senior director Colin Raftery said: “These products are widely used in a range of building projects across the UK, and account for a material part of the construction costs faced by businesses and public bodies.
“As the majority of these materials are sourced locally, it’s vital to ensure that enough competition will remain at the local level so there’s enough choice and prices remain fair.”
The £178 million deal would see 100 sites move from Cemex to Breedon, including aggregate-producing quarries, ready-mixed concrete facilities, asphalt plants and a cement terminal.
The CMA said it is concerned that competition in the supply of non-specialist aggregates, ready-mixed concrete or asphalt could be affected in 15 local markets across the UK.
There are also areas in the east of Scotland where the deal might make it easier for suppliers to align their behaviour, and compete less for customers in the region.
“While sufficient competition will remain in most areas, we are concerned that the deal could result in high prices and lower quality products in some areas where Breedon wouldn’t face sufficient competition,” Mr Raftery said.
Breedon, which has five working days to respond or face a phase two probe from the CMA, said it had completed the acquisition on July 31.
“The outcome is broadly in line with Breedon’s expectations and the company now has a short period during which to offer remedies to address the CMA’s outstanding concerns,” Breedon added.
“These are expected to take several months to implement, during which time the former Cemex assets will continue to be held separate from Breedon and operated as Pinnacle Construction Materials.”