Construction materials deal raises competition concerns

Breedon and Cemex are two of the leading producers and distributors of construction materials in the UK and Ireland.

Breedon, which has operations across Shropshire and the West Midlands, announced in January that it had agreed a £178 million deal to buy approximately 100 Cemex sites, including aggregates quarries, ready-mixed concrete facilities, asphalt plants and a cement terminal, across the UK.

All of these materials are widely used in the UK construction industry as essential components in the construction of roads, buildings and other infrastructure.

Following its initial phase one investigation, the CMA found that the deal gives rise to competition concerns in relation to the supply of ready-mixed concrete, non-specialist aggregates or asphalt in 15 local markets across the UK. In all of these local markets, the two businesses currently have a large presence and compete closely, with limited competition from other suppliers.

The CMA is concerned that the deal could result in a substantial lessening of competition, leading to higher prices and lower quality building materials for UK construction projects.

Colin Raftery, CMA senior director 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.

“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.”

Breedon and Cemex must now address the CMA’s concerns within five working days. If they are unable to do so, the merger will be referred for an in-depth phase tw investigation.