Competition Commission steps in on Breedon’s Scottish deal

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Competition Commission steps in on Breedon’s Scottish deal

Breedon Aggregates may have to sell asphalt and ready-mix concrete (RMX) operations in three areas of northeast Scotland, the Competition Commission (CC) has provisionally ruled.

The CC has been investigating the market implications of Breedon's acquisition of a package of assets from Aggregate Industries last year and has found that some customers could face higher prices.

Breedon completed the £34m deal in April 2013. It included 11 aggregate quarries (six active), four asphalt plants, nine readymix concrete (RMX) plants and two concrete block plants at 18 sites across Grampian, Tayside, Highlands and Hebrides.

Prior to the acquisition Breedon was already the largest supplier of these products in northeast Scotland.

In a summary of its provisional findings published today, the CC states that Breedon and Aggregate Industries were previously competitors for many of these products across northeast Scotland and that asphalt customers in Aberdeen and Inverness as well as RMX customers in Peterhead, could face higher prices due to the loss of competition and lack of alternative suppliers.

The CC has published ‘a notice of possible remedies’ to address the anticompetitive effects of the merger, which include requiring Breedon to sell asphalt and RMX operations in the areas concerned to a competitor approved by the CC.

CC deputy chairman Simon Polito, who chaired the inquiry group, said: 'The nature of these products means the markets are local-they are expensive to transport and additionally RMX has a short shelf life. So the loss of a competitor in even a relatively small area matters when the cost and proximity of the production site are the most important factors for customers and in a market where most prices are negotiated. Both products are also vital for construction projects and road building. We now want to look in detail at what measures will protect the interests of customers. This is likely to involve the sale of asphalt and RMX sites in the affected areas.'

The CC is required to publish its final report by 5th May 2014.

Any interested party is invited to respond to the provisional findings report, in writing, by 27th February 2014. To submit evidence, email Breedon-AI@cc.gsi.gov.uk.

 

 

 

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