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OFT considers undertakings in Aggregate merger instead of reference to the Competition Commission

163/06    20 November 2006

The OFT has decided today not to refer the completed acquisition by Aggregate Industries Limited of Foster Yeoman Limited to the Competition Commission. This is provided that satisfactory undertakings are given to address the competition concerns arising from the supply of asphalt in three local areas, all in the South East of England.

The OFT has identified competition concerns in regard to the supply of asphalt from plants located in Crawley (West Sussex), Theale (Berkshire) and Hertford. In Crawley and Theale the OFT is concerned about the loss of competition in the local areas as a result of the removal of an independent competitor there. In Hertford, however, the OFT is concerned that the merger brings together the two main existing competitors in the local area, Aggregate Industries and Lafarge, in a joint venture in a way which might increase the possibility of coordinated commercial behaviour between them. It is the first time that the OFT has reached such a decision on a merger on this basis.

Vincent Smith, Senior Director for Competition at the OFT said:

'We think that this merger may have led to a substantial lessening of competition in the supply of asphalt in some local areas. We will now consider whether the proposed divestments will address our competition concerns in these areas.'

NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT 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 a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.

5. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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