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OFT refers anticipated acquisition by Wienerberger Finance Service BV of Baggeridge Brick plc

174/06    11 December 2006

The OFT has referred the anticipated acquisition by Wienerberger Finance Service BV (a wholly owned subsidiary of Wienerberger AG) of Baggeridge Brick plc to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of clay bricks in the UK.

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

'The proposed merger would leave the UK bricks market with three principal clay brick suppliers (Ibstock, Hanson and Wienerberger) accounting for around 90 per cent of sales. This is a merger between the third and fourth largest brick manufacturers in the UK. On the one hand, it is possible that the transaction would create a third force providing greater competition to Ibstock and Hanson. On the other, given the features of the UK bricks sector, there is a realistic prospect that the merger would increase the possibility of coordinated pricing behaviour by the three main suppliers, especially for larger volume contracts. On balance, given risk of higher prices to large UK buyers of bricks (who account for a substantial share of purchases) and ultimately consumers, the OFT has decided to refer the merger to the Competition Commission for further examination.'

The CC is expected to report by 28 May 2007.

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 and 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. The CC may extend the 24 week period within 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.

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

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