Anticipated acquisition by Midland Quarry Products Limited of the Griff Quarry currently owned by Hanson Quarry Products Europe Limited

Affected market: Aggregates and asphalt

No. ME/1274/04

Please note that the full text of the decision can be downloaded by using the link on the right . What follows are extracts regarding the parties, the transaction, jurisdiction, assessment and decision.

Please note square brackets indicate figures removed or replaced by a range at the request of the parties

The OFT's Decision on reference under section 33 of the Enterprise Act 2002 given on 27 September

PARTIES

Midland Quarry Products Limited (MQP) is a private company owned as a joint venture between Tarmac Limited (Tarmac) and Hanson Quarry Products Europe Ltd (HQP). MQP produces aggregates and coated stone for supply primarily into the Midlands region. Tarmac and HQP are subsidiaries of Anglo American plc (AA) and Hanson plc respectively and are both active in the building materials and construction sector in the UK. The Griff Quarry (Griff), an aggregates and coated stone plant in Warwickshire, is currently wholly owned by HQP. Griff's UK turnover for 2003 was [<£70 million].

TRANSACTION

MQP proposes to acquire Griff from HQP for a purchase price of [ ]. The transaction was notified to the OFT on 19 July 2004 and the administrative deadline expires on 27 September 2004.

JURISDICTION

As a result of this transaction MQP and Griff will cease to be distinct. The parties overlap in the supply of aggregates and asphalt (also termed coated stone). In relation to MQP and Griff ceasing to be distinct, the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met in respect of the production of asphalt in the 30 mile radius around Griff. In addition, as a result of this transaction, AA and Griff will cease to be distinct by virtue of section 26 of the Act, since, in the OFT's view, the 50 per cent stake held by AA in MQP will confer on AA the ability materially to influence the policy of Griff (see paragraph 15 below). In relation to AA and Griff ceasing to be distinct, the share of supply test is met in respect of the production of aggregates and asphalt in the 30 mile radius around Griff. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of two relevant merger situations.

ASSESSMENT

This anticipated acquisition will result in the creation of two merger situations. For both merger situations, and in both the aggregates and asphalt sectors, the share of supply increment is small. The OFT's previous 'safe harbour' rule of thumb of a post-merger share in the relevant area of below 33 per cent is not exceeded, and no evidence otherwise suggested substantial competition concerns in respect of AA's gain of material influence over MQP in both aggregates and asphalt or MQP's acquisition of Griff in aggregates. As to the acquisition by MQP of Griff, where a combined share of [35-45] per cent is created in the supply of asphalt in the surrounding area, the increment is just [0-5] per cent, there is no third party concern, no evidence of previous direct competition between the parties, and a number of significant remaining competitors in the area, with others just beyond.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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