On 16 August 2011, the Office of Fair Trading (OFT) announced that it has provisionally decided to refer the aggregates market to the Competition Commission (CC) for further investigation. The OFT’s consultation on that provisional decision is open until 30 September 2011.
At the same time, the OFT published the report on its study of the aggregates market and the reasons for its reference proposal. It identified issues in the structure of the aggregates market, including high and increasing concentration, the effects of vertical integration and high barriers to entry due to the difficulty of obtaining planning permission. The OFT also noted that it has concerns about certain conduct of firms within the aggregates market.
Other issues of OFT concern include:
- information exchanges across the markets for aggregates and cement; and
- an apparent squeeze between rising cement prices and stable or falling ready-mix concrete prices.
The OFT notes that some of the identified issues are “persistent concerns”.
An investigation by the CC would be a lengthy and detailed process, involving significant input by the companies concerned. If the CC finds that market features prevent, restrict or distort competition, it has extensive powers to take actions to remedy these adverse effects. These powers include obtaining undertakings from companies or imposing orders to address competition issues.
If you want to make your voice heard –whether to argue for or against a full CC market investigation – now is the time to do it.