OFT refers Anglo American/Lafarge venture to Competition Commission

The Office of Fair Trading has referred the proposed joint venture between Anglo American and Lafarge S.A. to the Competition Commission for further investigation over competition concerns in a number of markets.

The two global firms, who supply construction materials in the UK proposed to establish a joint 50:50 venture to which each of them would contribute the bulk of their construction materials businesses in the UK.

The OFT has highlighted concerns that the joint venture could undermine independent ready-mix concrete suppliers by making it substantially more difficult for them to source bulk grey cement at competitive prices.

The OFT found that the proposed joint venture involves overlaps between the parties’ activities in a number of product markets, at local, regional and national level.

In addition, vertical supply relationships arise between the parties’ activities, which may impact on the ability of suppliers in certain markets to compete.

Ali Nikpay, OFT senior director and decision maker in this case, said: “The proposed joint venture would bring together Tarmac’s and Lafarge’s construction material assets in the UK. This represents a significant structural change in this sector and raises serious competition issues in several markets which need to be considered in detail by the Competition Commission.

“Although the parties did offer to divest a variety of assets in order to try to resolve the issues identified, we are not confident that the package proposed would clearly remove our concerns in all areas.”

In a statement Anglo American said: “We note the OFT’s decision to refer the proposed 50:50 joint venture to combine the assets of Tarmac UK and Lafarge UK for review by the Competition Commission.

“This marks the next stage in the regulatory process and we will work with the Competition Commission with the aim of achieving clearance of the joint venture as soon as possible. In the meantime, Tarmac UK and Lafarge UK operations will continue to operate independently.

“The proposed JV remains an exciting opportunity for both companies and will create a leading UK construction materials company, with a portfolio of high quality assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced management teams and a portfolio of well-known and innovative brands.”