Mergers: Commission approves acquisition of building materials group Italcementi by HeidelbergCement, subject to conditions

MIL OSI – Source: European Union –

Headline: Mergers: Commission approves acquisition of building materials group Italcementi by HeidelbergCement, subject to conditions

Commissioner Margrethe Vestager, in charge of competition policy said: “Competitive markets for cement and concrete are essential for the EU’s construction sector. I welcome the proposed commitments as they will ensure that HeidelbergCement’s multibillion euro takeover of Italcementi will not harm effective competition.”

The companies’ activities have substantial overlaps in Belgium and its neighbouring regions with combined market shares above 50%. As a result, the Commission had concerns that the merged entity would have faced insufficient competition from the remaining players and that the takeover would have led to higher prices for cement and ready-mix concrete in the area. The Commission has now concluded that HeidelbergCement’s commitment to divest Italcementi’s business in Belgium addresses these concerns.

The proposed transaction

The proposed takeover would combine HeidelbergCement and Italcementi, which are both global producers of cement, aggregates, ready-mix concrete, white cement and other related products.

From a geographical perspective, their activities are largely complementary in the EEA. HeidelbergCement is active in Northern, Western and Central Europe whereas Italcementi focusses on Southern Europe, operating cement facilities in Italy, France, Spain and Greece. Italcementi is also active in Belgium and Bulgaria.

The parties’ activities in grey cement substantially overlap in Belgium and to a lesser extent in Southern Italy. There are also cross-border overlaps between their grey cement activities in Germany/France and in Bulgaria/Romania. The merging parties’ activities in aggregates and ready-mix concrete mainly overlap in Belgium and Northern Spain whereas their white cement activities overlap primarily in Belgium, France and Austria.

Commission investigation

The Commission’s investigation mainly focussed on the overlaps in Belgium and adjacent regions.

HeidelbergCement operates two cement production sites in Belgium as well as three production sites in the Netherlands. Italcementi operates one cement production site in Belgium, which also serves customers in France and the Netherlands, as well as several production sites in France. The merged entity would have held market shares above 50% in Belgium and the adjacent regions.

The Commission had concerns that the remaining suppliers in these markets would be unable to exercise a sufficient competitive constraint on the merged entity and thus to avoid price rises for grey cement and ready-mix concrete.

No competition concerns were identified in any of the other markets where the activities of the two companies overlap. This is mainly because of the relatively small increments brought about by the transaction and the number and strength of alternative suppliers available in those markets.

Proposed commitments

HeidelbergCement offered to remove the overlap between the companies’ activities in Belgium and adjacent regions by divesting the entire Italcementi business in Belgium centred around its subsidiary Compagnie des Ciments Belges S.A. (“CCB”).

The divestment includes:

  • all of Italcementi’s cement, ready-mix and aggregates assets in Belgium;
  • Italcementi’s stake in an existing limestone joint venture with LafargeHolcim;
  • as well as a portion of HeidelbergCement’s limestone quarry in Antoing provided in exchange for a portion of Italcementi’s Barry quarry, which will be retained by HeidelbergCement.

The commitments ensure that the divested business will have long-term access to adequate limestone reserves.

The Commission found that these commitments address the competition concerns identified and concluded that the proposed transaction, as modified by the commitments, would raise no competition concerns. The Commission’s decision to approve the deal is conditional upon full compliance with the commitments.

The transaction was notified to the Commission on 1 April 2016.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

More information will be available on the competition website, in the Commission’s public case register under the case number M.7744.

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