EU deepens investigation into Holcim/Cemex Spanish deal

By Helen Wright25 April 2014

The European Commission said it has now opened an in-depth probe into a proposed acquisition of Holcim's cement operations in Spain by rival producer Cemex, after launching an initial investigation last autumn.

It said its preliminary investigation indicated that the proposed transaction might substantially reduce competition in the market for cement in certain areas of Spain.

However, it highlighted that the opening of an in-depth inquiry would not prejudge the outcome of the investigation. It said it now had 90 working days, until 5 September, 2014, to reach a decision on whether the deal was in line with EU merger regulations.

The Commission is concerned that the transaction may reduce competition in certain areas of Spain where the two companies' activities overlap. Under the deal, Cemex planned to acquire control of Holcim's activities in cement, ready-mix concrete, aggregates and mortar in Spain.

The Commission warned that the removal of Holcim could facilitate co-ordination between the remaining competitors in the Spanish market.

“Indeed, collusion based on an allocation of customers and parallel increase of prices could become more effective and sustainable because of the reduction in the number of independent competitors and the fact that the remaining players would be more similar,” it said.

Pricing influence

In addition, the Commission said its investigation had shown that the merged companies might be able to exercise significant influence on the level of prices for cement in other areas, where they are strong rivals. It said the remaining competitors, such as Cementos La Cruz and Cementos La Unión, might not be able to react to a price increase.

It said the new, in-depth investigation into the proposed acquisition would determine whether its initial concerns were confirmed or not.

The proposed Spanish asset acquisition was part of a series of deals agreed between Cemex and Holcim last summer that would see both companies reorganise their European businesses.

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