UK competition watchdog creates new cement firm

Lafarge Tarmac will be required to sell a plant in Derbyshire or Staffordshire and offload accompanying ready-mix concrete plants in order to facilitate the creation of the new producer

Lafarge Tarmac
Lafarge Tarmac

Competition in the UK cement market is to be boosted with the creation of a new player, the competition watchdog revealed.

Lafarge Tarmac will be required to sell a plant in Derbyshire or Staffordshire and offload accompanying ready-mix concrete plants in order to facilitate the creation of the new producer.

The measures follow a two-year investigation by the watchdog which found that the way the market is set up aids coordination between its three major players, including Cemex and Hanson.

It believes that higher prices resulting from the lack of competition cost customers in the cement market at least £30 million a year.

Inquiry chairman Professor Martin Cave said the amount of construction and building work funded by the public purse underlined the importance of ensuring customers get better value for money. He added: “We believe 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 years and led to higher prices for customers.”

The watchdog is also introducing measures to limit the flow of information between producers, including a three-month delay in the publication of cement production data.

Today’s report from the Commission is in line with its provisional decision on possible remedies made in October.

Lafarge Tarmac will be required to divest either of its cement plants at Tunstead in Derbyshire or Cauldon in Staffordshire, with the purchaser also able to acquire some of its ready-mix concrete plants.

Cemex said the allegation of excessive profit was not something it recognised in its own dealings with the market.

A spokesman added: “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.”

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