The UK Office of Fair Trading (OFT) has referred a proposed joint venture to combine the UK construction materials businesses of French materials giant Lafarge and Tarmac UK to the independent Competition Commission.

Lafarge and Tarmac UK - a subsidiary of mining company Anglo American - want to create a UK-based cement, aggregates, ready-mixed concrete and asphalt joint venture.

The 50:50 partnership would see Lafarge Cement UK and Lafarge Aggregates & Concrete UK pool their resources with Tarmac, which owns 118 quarries, 69 asphalt plants and 180 ready-mixed concrete sites.

Supply overlaps

But the OFT highlighted concerns over overlaps in the supply of aggregates, asphalt, ready-mixed concrete and grey cement on a local, regional and national level. It said the joint venture could threaten independent ready-mixed concrete suppliers by making it substantially more difficult for them to source bulk grey cement at competitive prices.

OFT senior director Ali Nikpay said, "The proposed joint venture would bring together Tarmac's and Lafarge's construction material assets in the UK. This represents a significant structural change in this sector and raises serious competition issues in several markets which need to be considered in detail by the Competition Commission.

"Although the parties did offer to divest a variety of assets in order to try to resolve the issues identified, we are not confident that the package proposed would clearly remove our concerns in all areas."

The Competition Commission is expected to report on the case by 16 February, 2012.

The news comes after an OFT study, which began last year, identified a number of features of the UK aggregates, cement and ready-mixed concrete sectors which could "prevent, restrict or distort competition".

The OFT proposed referring the sectors to the Competition Commission for more detailed investigation.

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