Office of Fair Trading objects to Tarmac, Lafarge deal, UK

Office of Fair Trading objects to Tarmac, Lafarge deal, UK
Published: 02 September 2011

The proposed tie-up between Anglo American’s Tarmac and Lafarge of their construction materials businesses in the UK has been challenged by the country’s Office of Fair Trading (OFT), Reuters reports.

The OFT said in a statement on Friday it has referred the proposed merger deal to the Competition Commission for further investigation after concluding that competition concerns arise in a number of markets.

"This represents a significant structural change in this sector and raises serious competition issues in several markets which need to be considered in detail by the Competition Commission," said Ali Nikpay, senior director at the OFT.

"Although the parties did offer to divest a variety of assets in order to try to resolve the issues identified, we are not confident that the package proposed would clearly remove our concerns in all areas," he said.

The OFT said there are overlaps in a number of markets on a local, regional and national level in the supply of aggregates, asphalt and ready-mixed concrete. It added that the merger might also affect the ability of suppliers in certain markets to compete.

Anglo said it would hive off its unwanted Tarmac UK business into a joint venture with Lafarge UK in February, with both companies expected to contribute the bulk of their construction materials businesses in the UK, after it failed to make an outright sale of Tarmac.

Both companies acknowledged the decision by the OFT and said they would continue to work with the Competition Commission "with the aim of securing approval for the merger as swiftly as possible".
The Competition Commission is expected to report by Feb 16.