Building material companies face prices inquiry

COMPETITION chiefs are set to carry out an investigation into the building materials sector amid concerns taxpayers are paying too high a cost for public schemes.

An initial investigation into the £3.4bn a year industry suggested deals may have over-consolidated and distorted the market.

As a result, the Government may have been paying too much for aggregates, cement and ready-mix concrete used in schools, hospitals and roads, the Office of Fair Trading (OFT) said.

Hide Ad
Hide Ad

It found that only five major firms controlled more than 90 per cent of the cement market, 75 per cent of aggregate sales and 68 per cent of ready-mix concrete production. Tarmac owner Anglo American and France’s Lafarge have announced plans to combine their UK ventures.

Both are among the firms being looked at alongside Hanson UK, Cemex and Aggregate Industries.

The Competition Commission will conduct a more detailed investigation into the market once the OFT has consulted firms in the sector. It could force larger companies to break up their UK interests if anti-competitive practices are found.

OFT chief executive John Fingleton said: “We are concerned that competition is not working well in these sectors, with underlying features of the market giving rise to persistent concerns. Lack of effective competition not only affects the public sector and business customers but ultimately leads to higher prices for consumers too.”

Hide Ad
Hide Ad

The watchdog also expressed concern that major firms have been engaged in multiple contacts and information exchanges, alongside asset swaps.

Two years ago the OFT issued penalties to 103 companies totalling £129m over illegal bid rigging for public sector building contracts after construction firms colluded to set inflated prices.

Related topics: