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The European Commission has cleared under the EU Merger Regulation the proposed acquisition of several assets of Holcim of Switzerland and of Lafarge of France 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.
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 RMX, 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.
CRH Plc, based in Ireland, is an international group mainly active in the manufacture and supply of a wide range of building materials such as cement, asphalt, and ready-mixed concrete and building products.
Holcim (Switzerland) and Lafarge (France) are global producers of building construction materials.
On 15 December 2014, the Commission approved the acquisition of Lafarge by Holcim, subject to commitments. The decision as well as additional information on that case are available in the Commission’s public case register under the case number M.7252.
The assets divested by Holcim and Lafarge consist of production facilities of grey and white cement, aggregates, RMX, asphalt and other construction materials. They are located in a number of Member States (France, Germany, United Kingdom, Hungary, Slovakia, Romania), and are part of a wider global divestment package (including assets in the United States, Brazil, Serbia and the Philippines).
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).