The European Commission has cleared under the EU Merger Regulation the proposed acquisition of several assets of Holcim and Lafarge by Irish building materials manufacturer CRH. The Commission concluded that the transaction would raise no competition concerns, in particular because the merged entity will continue to face sufficiently strong competition after the merger and customers will have alternative suppliers in all markets concerned.
The proposed transaction concerns assets worth several billion euros which Holcim and Lafarge committed to divest to gain the Commission clearance of their merger in December 2014. CRH's activities overlap with the divested businesses in a number of areas, such as cement, aggregates, ready-mix concrete and asphalt. As most of these materials are sold within a short distance from the site where they are manufactured, the Commission focussed its assessment on the impact of the merger on customers located near the production facilities of CRH and of the divested assets.
Assets to be divested
The two companies are divesting the following assets in the EU to CRH:
• France: in metropolitan France, all of Holcim's assets, except for its Altkirch cement plant and aggregates and ready-mix sites in the Haut-Rhin region, and a grinding station of Lafarge in Saint-Nazaire; Lafarge's assets on Reunion island, except for its shareholding in Ciments de Bourbon
• Germany: Lafarge's assets
• Hungary: Holcim's operating assets
• Romania: Lafarge's assets
• Slovakia: Holcim's assets
• United Kingdom: Lafarge Tarmac assets with the exception of its Cauldon and Cookstown plants and certain associated assets.
The Commission's investigation focused on the effects of the merger on competition for grey cement in three areas, namely (i) the cross border region between Poland and Slovakia, (ii) the cross border region between France and Belgium, and (iii) the United Kingdom. The Commission also looked at the competitive landscape for ready-mix concrete, cementitious materials, aggregates and asphalt in several regions of the European Economic Area (EEA).
In the United Kingdom, the Commission assessed in particular overlaps in South Wales and Scotland and concluded that the merged entity will continue to face competition from major integrated players, such as Hanson (HeidelbergCement), Cemex, Hope, and LafargeHolcim, as well as from importers.
In France, Belgium, Slovakia and Poland, the Commission's investigation showed that the increases in market shares are not significant and the merged entity would still face competition from a number of competitors.
Finally, the Commission concluded that the transaction was unlikely to lead to less competition in relation to the production of ready-mix concrete, cementitious materials, aggregates and asphalt in local areas across the EEA, because of the presence of alternative suppliers.
The Commission therefore concluded that the transaction would raise no competition concerns.
The divestments remain subject to the completion of the merger, including a successful public exchange offering to Lafarge's shareholders and approval by Holcim's shareholders.