UK watchdog to force Hanson to sell GGBS production facility

UK watchdog to force Hanson to sell GGBS production facility
Published: 14 January 2014

Tagged Under: UK Competition GGBS Hanson Cement 

The UK’s Competition Commission (CC) plans to force Hanson to sell off one of its facilities as part of a move to introduce a fifth player to the market to increase competition.

In its final report into the domestic aggregates, cement and ready-mix concrete markets, the CC said identified competition problems resulting from there being only one domestic producer of GGBS in Great Britain (Hanson) with exclusive rights to use the output of Lafarge Tarmac, the single domestic producer of GBS.

In October, the CCI said it will require Lafarge Tarmac to sell a cement plant and some accompanying ready-mix plants if necessary.

The measures follow a two-year investigation which found that “both structure and conduct in the cement sector restrict competition by aiding coordination between the three largest producers (Lafarge Tarmac, Cemex and Hanson,” the CC said in a statement. This has resulted in higher prices for all cement users, the watchdog added.

The CC estimates that higher prices resulting from this lack of competition cost customers at least £30 million a year and probably more in the future for cement, and a further £15-£20 million a year for GGBS. The CC believes that without its intervention, this situation would persist for many years to come.

Professor Martin Cave, CC Deputy Chairman and Chairman of the Inquiry Group, said: “We believe that the entry of a new, independent cement producer is the only way to disturb the established structure and behaviour in this market which has persisted for a number of years and led to higher prices for customers.

“Despite falling demand and increasing costs during the last few years, profitability among GB producers has been sustained and their respective markets shares have changed little. This is not what you would expect to see in a well-functioning market, under these circumstances.

“The problem in relation to GGBS stems from there being only one domestic producer (Hanson) which again leads to higher prices for customers.

“We believe our measures can bring about a substantial, swift and lasting increase in competition in this economically vital market.”