The Office of Fair Trading (OFT) has decided to refer a proposed joint venture between Anglo American plc (its subsidiary Tarmac Limited) and Lafarge SA. The joint venture would operate in the UK construction materials sector. According to the OFT it is likely to result in serious competition concerns in a number of markets where the parties are active at both the same and different levels of the supply chain. Those construction materials affected by the proposed transaction are: aggregates; asphalt; ready-mixed concrete; and cement.

Following its review of information provided by the parties and some 300 customers and competitors, the OFT has highlighted the following issues in particular as giving rise to a substantial lessening of competition in local, regional and national markets:

Where the parties operate at the same level of the supply chain:

  • overlaps between the parties in the supply of aggregates, asphalt and ready-mixed concrete in many local areas (and also at regional and national levels for certain types of aggregates);
  • an overlap in the supply of bulk grey cement at regional and/or national level; and
  • increased co-ordination in the supply of bulk grey cement.

Where the parties operate at different levels of the supply chain:

  • foreclosing the market to independent ready-mixed concrete suppliers by preventing them from sourcing bulk grey cement at competitive prices.

The offer of undertakings by the parties to divest various UK construction materials assets was not believed by the OFT to be sufficient to deal with all the issues it had identified. The Competition Commission will now carry out a detailed investigation of those issues and will report its findings by 16 February 2012. In the meantime, Tarmac and Lafarge will continue to operate separately in the market.

Interested third parties should provide initial comments to the Competition Commission by 23 September.