Lafarge Holcim merger cleared in Singapore

Lafarge Holcim merger cleared in Singapore
08 September 2014

The Competition Commission of Singapore (CCS) has given Lafarge and Holcim the greenlight to merge their businesses in the country.

Holcim Singapore manufactures and supplies ready-mix concrete to customers. Holcim also imports grey cement. Similarly, Lafarge Singapore imports and supplies cement to third-parties in Singapore. Lafarge, through its subsidiary and joint venture partner, manufactures and supplies ready-mix concrete in Singapore.

After a public consultation exercise, the CSS issued its decision that 'The transaction is unlikely to lead to substantial competition concerns in Singapore," due to four main reasons: Firstly, the companies are not the largest market players in the country and that there is significant localised competition in the relevant overlapping domestic markets.

Secondly, CCS has received feedback that there are alternative suppliers which have the capacity to meet any additional demand and is able to constrain any exercise of market power by the merged parties. Therefore, customers would be able to switch to these alternative suppliers without substantial switching costs.

Thirdly, the CCS deemed that customers are able to exercise countervailing buyer power due to the significant volume they purchase from suppliers.

Finally, the CCS stated that the nature of the local market, with multiple suppliers including smaller players, makes it more difficult, post-merger, for players in the relevant markets to coordinate their behaviour to raise prices, or reduce quality or output.

Published under Cement News