By Costas Pitas
LONDON Jan 14 Britain's competition regulator
is to force two of the country's biggest cement producers to
sell off production plants following a two-year investigation
which found a lack of competition that had pushed up prices.
The Competition Commission, in its final report on the case
on Tuesday, said it would require HeidelbergCement's Hanson
to sell off one of three plants to increase
competition in ground granulated blast furnace slag (GGBS), a
substitute for, and ingredient for cement.
In October, the watchdog had told rival Lafarge Tarmac
to sell one of its cement plants in Britain in
a bid to introduce a fifth player to that market.
The watchdog criticised current cement market conditions in
the country, where Lafarge Tarmac, Cemex and Hanson
rank as the three largest producers. The cement industry
globally suffered from the economic downturn that followed the
2008 financial crisis which led to a slowdown in construction.
"Despite falling demand and increasing costs during the last
few years, profitability among GB (British) producers has been
sustained and their respective markets shares have changed
little," Professor Martin Cave, Deputy Chairman of the
Competition Commission, said.
"This is not what you would expect to see in a
well-functioning market, under these circumstances."
The regulator said it believed a lack of competition in the
industry has cost customers 30 million pounds ($49 million) a
year, prompting it to rule that greater choice was the only way
to bring down prices.
The watchdog aims to increase competition in both cement
production and the supply chain for GGBS.
The Commission will have to approve the buyer for the GGBS
plant that Hanson decides to sell and it cannot be a British
Hanson said it was pleased the watchdog had not gone ahead
with plans to force the company to sell off several sites but
was disappointed about the way the process was carried out and
was mulling further action.
"The Commission did not consult us properly on its findings
in relation to GGBS and we found many errors in its analysis,"
Ed Gretton, UK head of legal at Hanson, said.
"We will now consider our position before making a decision
with regard to the appeal we filed before Christmas."
In October, the regulator said Lafarge Tarmac would have to
choose between divesting either its Cauldon or its Tunstead
cement plants in central England. The buyer would have to be
approved by the Commission and cannot be one of the country's
existing cement producers.
Lafarge Tarmac Chief Executive Cyrille Ragoucy said on
Tuesday he was disappointed with the regulator's decision in its
"This is not reasonable or proportionate and we have not
been given a fair opportunity to defend our position."