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  • Aggregates, cement and ready-mix concrete market investigation Final report

    14 January 2014

  •  Competition Commission 2014

    Website: www.competition-commission.org.uk

    http://www.competition-commission.org.uk/�

  • Members of the Competition Commission who conducted this inquiry

    Martin Cave (Chairman of the Group)

    Roger Davis

    Phil Evans

    Professor Thomas Hoehn

    Malcolm Nicholson

    Chief Executive and Secretary of the Competition Commission

    David Saunders

    The Competition Commission has excluded from this published version of the final report information which the inquiry group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified

    information: considerations relevant to disclosure). The omissions are indicated by []. Some numbers have been replaced by a range. These are shown in square brackets.

    Non-sensitive wording is also indicated in square brackets.

  • Contents Page

    Summary .............................................................................................................................. 1 Findings ............................................................................................................................. 1-1 1. The reference and our statutory task ............................................................................ 1-1

    Background to the reference ........................................................................................ 1-2 The OFT’s reference decision .................................................................................. 1-2 European Commission investigation under Article 101 TFEU .................................. 1-3 Market developments ............................................................................................... 1-3

    Conduct of the investigation ......................................................................................... 1-4 Structure of final report ................................................................................................. 1-5

    2. Industry background ..................................................................................................... 2-1 Introduction .................................................................................................................. 2-1 Aggregates ................................................................................................................... 2-1

    Description of products ............................................................................................ 2-1 Demand for aggregates in GB ................................................................................. 2-3 The planning regime for land-won primary aggregates ............................................ 2-4 Marine aggregates and the licensing regimes for the dredging of marine

    aggregates ............................................................................................................ 2-8 Secondary and recycled aggregates and the applicable planning regimes .............. 2-9 The aggregates levy ................................................................................................ 2-9

    Cement ...................................................................................................................... 2-10 Description of products .......................................................................................... 2-10 Cementitious products ........................................................................................... 2-12 Demand for cement in GB...................................................................................... 2-14 EU Emissions Trading Scheme.............................................................................. 2-14 The Carbon Reduction Commitment Energy Efficiency Scheme ............................ 2-17 UK Climate Change Agreements ........................................................................... 2-18 Overlaps between CRC and CCAgs ...................................................................... 2-18 Climate Change Levy ............................................................................................. 2-19

    RMX ........................................................................................................................... 2-19 Description of products .......................................................................................... 2-19 Demand for RMX in GB ......................................................................................... 2-19

    Input relationships between aggregates, cement and RMX and extent of vertical integration .................................................................................................................. 2-20

    3. Construction materials companies ................................................................................ 3-1 Introduction .................................................................................................................. 3-1 The Majors ................................................................................................................... 3-2

    Aggregate Industries ................................................................................................ 3-2 Cemex ..................................................................................................................... 3-3 Hanson .................................................................................................................... 3-6 Lafarge .................................................................................................................... 3-8 Tarmac .................................................................................................................... 3-9 Lafarge Tarmac ..................................................................................................... 3-12 Hope Construction Materials .................................................................................. 3-13

    Medium-tier independents .......................................................................................... 3-14 Breedon Aggregates .............................................................................................. 3-16 Brett Group ............................................................................................................ 3-16 CPV (Southern Cement and Dragon Alfa) .............................................................. 3-16 Dudman Group (prior to going into administration) ................................................. 3-17 Leiths ..................................................................................................................... 3-17 Marshalls ............................................................................................................... 3-17 Premier Cement ..................................................................................................... 3-18 Sherburn ................................................................................................................ 3-18 Thomas Armstrong ................................................................................................ 3-19

  • Titan ...................................................................................................................... 3-19 4. Framework for our competitive assessment ................................................................. 4-1

    The Guidelines ............................................................................................................. 4-1 Introduction .............................................................................................................. 4-1 The market investigation regime .............................................................................. 4-1 Features .................................................................................................................. 4-2 The AEC assessment .............................................................................................. 4-3

    Theories of harm .......................................................................................................... 4-4 Unilateral market power ........................................................................................... 4-5 Coordination ............................................................................................................ 4-6 Vertical integration and exclusionary behaviour ....................................................... 4-7 Aspects of policy and regulation have the effect of preventing, restricting or

    distorting competition ............................................................................................. 4-8 Effect of recent developments ...................................................................................... 4-9

    5. Market definition ........................................................................................................... 5-1 Introduction .................................................................................................................. 5-1 Aggregates ................................................................................................................... 5-2

    Product market definition ......................................................................................... 5-2

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