New player to enter the cement market in shake-up

The Competition Commission wants Lafarge Tarmac to sell one of its cement plants as well as offer some of its ready mix concrete sites in order to create a new independent producer in the UK.

It is concerned that the way the cement sector operates aids coordination between three major players – Lafarge Tarmac, Cemex and Hanson – and is likely to result in higher prices for customers.

Commission deputy chairman Professor Martin Cave said: “We think that these measures will go a long way towards establishing a more competitive market for customers.

“The fundamental importance of cement to the construction and building sectors and the amount of such work that is funded by the public purse only underlines the need for these actions.”

The watchdog also wants to limit the flow of information between producers, such as price announcement letters and industry data. Mr Cave added: “For a long time, these channels have given producers too much awareness of how their counterparts are performing and their future pricing strategy.”

Yesterday’s recommendations are provisional and subject to consultation.

In May, the watchdog said there were serious problems in the way market operated but noted there was no explicit collusion. It estimated that the behaviour could have cost consumers around £180m between 2007 and 2011.

Lafarge Tarmac will be required to divest either of its cement plants at Tunstead in Derbyshire or Cauldon in Staffordshire, with the purchaser also able to acquire some of its ready mix concrete plants. Lafarge Tarmac said it was disappointed with the watchdog’s proposals.

The company said: “The commission’s assumptions and reasoning have serious flaws and the biggest loser in this process will be the customer. There is strong evidence to demonstrate there is effective competition in the sector – with new players having recently entered the marketplace.”

Lafarge Tarmac has 24 sites in Yorkshire encompassing 43 operations including offices, quarries and asphalt plants, while Cemex too has operations in the region.

Hanson has several quarries in Yorkshire, as well as a network of around 20 ready mix concrete plants, asphalt plants in Leeds and Bradford, and a brickworks near Dewsbury.