The European Commission has opened an in-depth merger investigation into the planned acquisition of Cemex Croatia by Duna-Drava Cement ('DDC'). Registered in Hungary, DDC is jointly controlled by German construction material producers HeidelbergCement and Schwenk. DDC inter alia operates a cement plant in Kakanj, Bosnia and Herzegovina. Cemex Croatia, an arm of the international cement heavyweight Cemex, controls three cement plants in the Croatian coastal city of Split.

The Commission appears to be concerned about the effects the merger will have in southern Croatia, as it would combine the area's largest producer (Cemex Croatia) and importer (DDC) of cement. The Commission's concern is that, following the transaction, the remaining cement suppliers would be able to exercise only limited competitive pressure on the merged entity due to the transport costs to reach southern Croatia.

As a sign of significance the Commission is attaching to the case, EU commissioner in charge of competition, Margrethe Vestager, was quoted saying:

"The construction sector, like any other sector needs competition. As cement is an essential part of the sector we need to make sure that consolidation does not lead to higher prices for construction companies and ultimately consumers in Croatia."

The transaction is part of the wave of transactions in the cement industry triggered by the Holcim / Lafarge consolidation. The EU investigation is particularly interesting from the regional perspective as it evidences that, following Croatia's accession to the EU, regionally present companies now face not only the scrutiny of the local competition authorities but also that of the European Commission.