Breedon Aggregates Limited agreed to acquire Hope Construction Materials Limited, creating a merger of the companies. The two companies both supply aggregates which are used as base materials in the construction of roads, buildings and infrastructures. They also supply ready mixed concrete. Breedon Aggregates Limited is a producer of asphalt, and Hope Construction Materials Limited is a producer of cement.
In November 2015, Breedon Aggregates Limited and Hope Construction Materials Limited signed a sale and purchase agreement for Breedon Aggregates Limited to acquire complete share capital of Hope Construction Limited.
Off the back of this, the Competition and Market Authority (CMA) had to investigate if this could affect completion in their market.
Competitive assessment
The CMA looked in to whether the merger was realistically likely to create substantial lessening of competition within the market, and in the supply of the different materials to the local areas that both companies supplied to as a result of the merging of the two companies, which would cause a loss of existing competition.
In an industry like this, the affect of bad competition could be substantial – especially for public organisations needs for their services for mass transit systems who can be known to be less frugal when it comes to getting the best deal!
The Competition and Market Authority found that;
- There was not a horizontal overlap in primary aggregates between the parties with a certain area;
- In each area there would still be three competitors that also produce primary aggregates;
- In each area at least three competitor sites were located close to the focal site and closer than the competing site.
Source: https://assets.publishing.service.gov.uk/media/5774dd60ed915d622c0000cf/breedon-hope-full-text-decision.pdf
Third Parties
Third parties were also contacted to gather opinion on what they thought of the merger between Breedon Aggregates Limited and Hope Construction Materials Limited. None of the third parties had any concerns about the Merger of the two companies.
The Decision
The CMA believe that the merger may result in a significant loss of competition within the market that Breedon Aggregates Limited and Hope Construction operate in, and are considering whether to accept undertakings from Breedon Aggregates Limited. The companies had until the 19th April to make an undertaking to the CMA. If no offer of undertaking was made then the merger is referred to further investigation.
Breedon Aggregates Limited offered an undertaking within five working days of the CMA Authority notifying them. Breedon offered to divest the 14 RMX plants to address the serious lessening of competition.
A final decision is yet to be ascertained.