As well as provisionally requiring Lafarge Tarmac to sell a cement plant (and accompanying ready mix concrete (RMX) plants if necessary) to facilitate entry of this new producer, the CC is also proposing to limit the flow of information and data between cement producers.
Additionally, the CC is looking to increase competition in the supply chain for ground granulated blast furnace slag (GGBS—a partial substitute for cement) by ordering the sale of suitable production facilities. This remedy is subject to further consultation on the GGBS
market.
The measures are outlined in a summary of its provisional decision on remedies, the penultimate stage of the CC's market investigation into the supply of aggregates, cement and RMX in GB. In May, the CC published its provisional findings which found that both structure and conduct in the cement sector limits competition by aiding coordination between the three largest producers (Lafarge Tarmac, Cemex and Hanson) and is likely to be resulting in higher prices for all cement users.
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In an Addendum to the provisional findings, published today for consultation, the CC also identifies competition issues in the supply chain for GGBS. The CC has not identified any problems with the markets for aggregates or RMX.
The CC has not, at this stage, made a final decision regarding the existence and form of any competition problems. Therefore, our final decision on any competition problems, and appropriate remedies, will take account of responses to our provisional findings (as published in May) and to the Addendum to the provisional findings (published today) and of responses to our provisional decision on remedies (also published today).
Professor Martin Cave, CC Deputy Chairman and Chairman of the Inquiry Group, said: "As we indicated in May, both the scale of the problems we found in the GB cement markets and the way that they stemmed from established structure and conduct meant that extensive measures were likely to be necessary to address them. The best way to disturb the balance of a market where producers have focused on retaining their respective market shares rather than competing is to create the opportunity for a major new entrant.
"Being able to buy a cement plant—and a number of accompanying RMX plants if necessary—will give the new producer a foothold in the GB cement markets and will increase the number of GB cement producers, thereby disrupting the established patterns in these markets.
"In addition to this, we will tackle the channels which facilitate the flow of information between the GB cement producers, such as price announcement letters and industry data. For a long time, these channels have given producers too much awareness of how their counterparts are performing and their future pricing strategy.
"We think that these measures will go a long way towards establishing a more competitive market for customers. The fundamental importance of cement to the construction and building sectors and the amount of such work that is funded by the public purse only underlines the need for these actions."
(CD/IT)
