Newsroom

OFT refers WBB proposed acquisition of Tarmac's mineral and materials business

First OFT merger reference under the Enterprise Act

PN 114/03     14 August 2003

The OFT has today referred the proposed acquisition by Sibelco Minerals & Chemicals Ltd (trading as WBB) of the minerals and materials business of Tarmac Central Ltd to the Competition Commission (CC).

This case is the first reference made by the OFT to the CC since the merger provisions of the Enterprise Act came into force on 20 June. Previously references were made by the Secretary of State for Trade and Industry after considering OFT advice.

The OFT believes that if the purchase went ahead it might be expected to result in a substantial lessening of competition in the market for the supply of silica flour. This is used in fibre glass and in the ceramics and construction industries.

Although the silica flour sector is in decline, and is presently characterised by over-capacity, the merged business would have over 80 per cent of supply in the UK. A number of customers raised concerns that the merger would bring together the two main UK suppliers of silica flour.

Penny Boys, OFT Executive Director, said: 'While changes may prove inevitable, we believe this proposed merger may be expected to result in a substantial lessening of competition, and needs to be investigated by the Competition Commission.'

The OFT did consider whether undertakings in lieu of a reference might be given which would address those concerns. However WBB indicated that it was not prepared to proceed without acquiring the silica flour business and a behavioural remedy did not appear to the OFT to be appropriate.

In two other areas where product overlaps arise - in dolomite and feldspar -significant competition issues do not appear to arise. In a third, processed high purity silica sand for use by lead crystal manufacturers, the value of sales at less than £400,000 a year was not considered sufficiently important to justify reference.

The CC is required to publish its report by 28 January 2004.

NOTES

1. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or anticipated mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70m .
 
2. The CC may extend the 24 week period in which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

Back to:2003