Tarmac merger subject to disposals
THE Competition Commission has ruled that Wolverhampton building industry giant Tarmac can merge with Solihull rival Lafarge – but only if certain assets are sold.
A plan to create a 50:50 joint venture to combine Tarmac and Lafarge’s UK aggregates, asphalt, ready-mix concrete, cement, road contracting services and waste services has been with the commission since February.
The body has provisionally ruled that the proposed joint venture between Tarmac owner Anglo American and Lafarge could damage competition in the construction materials market.
But in a statement this week the commission said it has decided to approve the JV, subject to a number of conditions and remedies.
Tarmac and Lafarge will now be required to sell an extensive package of operations including a cement plant in Hope, Derbyshire, as well as the nearby Dowlow quarry and three linked rail depots.
Six aggregate quarries as well as Tarmac’s share of two quarries owned through its Midlands Quarry Products (MQP) joint venture with Hanson will also have to be sold as will as two asphalt plants and Tarmac’s share of five plants owned through MQP.
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.
“In bulk cement, there are currently only four UK producers and there is evidence that competition is not as effective as it could be. So, if the joint venture is to go ahead, it is essential to maintain the number of cement producers by bringing in a new player through the sale of the Hope cement plant – one of the largest in the country.
“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.”
A statement from Tarmac said: “We want to reassure customers, suppliers and stakeholders that there is no immediate change to the way they do business with Tarmac or to the service they receive from us as a result of this announcement.”
