Earlier this month, the Competition and Markets Authority (CMA) announced that Breedon Aggregates Limited’s (Breedon) anticipated acquisition of Hope Construction Materials Limited (Hope) could give rise to competition concerns in relation to 27 ready-mixed concrete (RMX) sites.
The CMA added that Breedon could avoid the acquisition being referred for an in-depth phase 2 merger investigation - if it offered an acceptable solution to address the competition concerns in those local areas where the sites are located.
As a result, Breedon has proposed undertakings to the CMA to divest 14 RMX sites to an up-front buyer approved by the CMA. The CMA has decided that there are reasonable grounds for believing that the undertakings offered by Breedon, or a modified version of them, might be accepted by the CMA.
The CMA now has until 23 June 2016 to consider whether to accept the undertakings, or a modified version of them, although the CMA may decide to extend this deadline to 25 August 2016 if it considers there are special reasons for doing so.
As part of this consideration process, the CMA will undertake a public consultation on whether the proposed undertakings are sufficient to address the competition concerns. If the undertakings are not accepted, the acquisition will be referred for a phase 2 merger investigation.
Both Breedon and Hope produce and supply aggregates and RMX. Aggregates are used in the construction of roads, buildings, bridges and other infrastructure - as well as in the production of RMX, concrete products and asphalt. RMX is concrete which is produced in a freshly-mixed and unhardened state ready for use on site. The 2 companies operate over 200 RMX sites across England, Wales and Scotland.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
Breedon produces and supplies aggregates, asphalt, RMX and concrete blocks in the UK and Hope produces and supplies cement, RMX, and aggregates in UK. Breedon’s completed acquisition of certain assets of Aggregate Industries UK Limited was previously investigated by the Office of Fair Trading and Competition Commission.
- The Reference Test: under the Enterprise Act 2002 (the Act) the CMA has a duty to make a reference to phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- Under the Act a relevant merger situation is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the United Kingdom (or a substantial part thereof) is created or enhanced (‘the share of supply test’).
- The CMA’s duty to refer the merger for a phase 2 investigation under the Act is not exercised whilst the CMA is considering whether to accept undertakings (if offered) in lieu of a reference.
- Enquiries should be directed to Siobhan Allen (email@example.com, 020 3738 6798).
- For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on merger cases.