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Breedon Aggregates Limited (Breedon) may have to sell asphalt and ready-mix concrete (RMX) operations in three areas of north-east Scotland after the Competition Commission (CC) provisionally found that some customers could face higher prices following Breedon’s acquisition of a package of assets from Aggregate Industries UK Limited (Aggregate Industries).

Breedon completed the acquisition in April 2013, which included 11 aggregate quarries, four asphalt plants, nine RMX plants and two concrete block factories, located at 18 sites in north Scotland. Prior to the acquisition Breedon was the largest supplier of these products in north-east 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 north-east 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 also today 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.

Simon Polito, Chairman of the Inquiry Group and CC Deputy Chairman, 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 5 May 2014.

Any interested party is invited to respond to the provisional findings report, in writing, by no later than 27 February 2014. The full provisional findings report will be published shortly. To submit evidence, please email Breedon-AI@cc.gsi.gov.uk or write to:

Inquiry Manager
Breedon/AI merger inquiry
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries. In April, the CC will join with the competition and certain consumer functions of the Office of Fair Trading (OFT) to form the new Competition and Markets Authority.

2. The members of the Inquiry Group are: Simon Polito (Chairman of the Group), Robin Aaronson, Lesley Ainsworth and Graham Sharp.

3. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or anticipated mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period. On 4 February 2014, the CC extended the reference period by eight weeks to 5 May 2014 due to the late provision of new market data that has delayed the publication of its provisional findings.

5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.