Cemex responds to CC report

Cemex responds to CC report
Published: 15 January 2014

Tagged Under: Cemex UK Competition 

Cemex has responded to the Competition Commission’s (CC) final report into the aggregates, ready-mix concrete and cement market in Great Britain, saying that the CC’s conclusion that there is insufficient competition in the cement market is “incorrect and therefore the remedies are disproportionate to the alleged harm which is itself unproven.”

The watchdog criticised current cement market conditions in the country, where Lafarge Tarmac, Cemex and Hanson are the three largest producers.

"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," Professor Martin Cave, Deputy Chairman of the CC, said.

The report stated that the lack of full competition in the market resulted in higher prices for all cement users. The three major producers have refrained from competing vigorously with each other by focusing on maintaining market stability and their respective shares.

Cemex, however, claims that the allegation of excessive profit is based on “a highly theoretical model" that is fundamentally flawed which we do not recognise in our day-to-day dealings with the market.”

The company said in a statement: “Unless the domestic cement industry is profitable then the UK risks a lack of investment in this vital sector; an increasing risk of off-shoring of cement manufacturing capacity and, as a consequence, an excessive reliance on imports to supply this planned growth in construction. Cement manufacturing is a capital intensive business and Cemex UK needs to make a fair return on its investments.”

Cemex did, however, note that it is pleased that the CC confirmed that there is no problem with the effective functioning of the ready-mix concrete markets and that the CC’s proposed divestment remedies will not affect its own assets and operations directly.