Competition concerns raised following Breedon acquisition

breedonBreedon Aggregates has reiterated its plans to sell over a dozen of its ready-mixed concrete (RMX) sites after a competition watchdog raised concerns over the firm’s takeover of Hope Construction Materials.

Breedon entered into a conditional agreement with Cortolina Investments to acquire Hope Construction Materials Limited for £336 million in November last year. The resulting business created the UK’s largest independent producer of cement, concrete and aggregates, operating over 200 RMX sites across England, Wales and Scotland.

A preliminary investigation by the Competition and Markets Authority (CMA) today said that the transaction gives rise to competition concerns in relation to 27 RMX sites, meaning that customers might face higher prices as a result of the merger in the local areas surrounding these sites.

The investigation has however ruled out any competition concerns over the production and supply of aggregates and in relation to the potential for the merging companies to restrict the supply of aggregates or cement (as inputs for other products) to rival suppliers.

Sheldon Mills, CMA senior director of mergers, and decision-maker in the initial investigation, said: “Ready-mixed concrete is an essential product for a wide range of construction projects of all sizes in the public and private sectors. The vast majority of the merger raises no concerns but there are a number of areas where the companies compete strongly with each other for customers and the concern is that the loss of such rivalry could lead to price rises for customers. The businesses may now resolve these concerns or face a detailed investigation.”

Breedon said it now anticipate disposing of approximately 12-15 sites following the report.

A spokesman for Breedon said: “This outcome is in line with our expectations and the company now has a short period during which to offer remedies to address the CMA’s outstanding concerns.

“Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later this summer in line with previous guidance.”

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