Displaying items by tag: Competition

UK: The Competition and Markets Authority (CMA) has announced that it will consider the undertakings offered by Breedon Group to which its deal with Cemex UK for acquisition of several of the latter’s ready-mix and aggregates operations would be subject. The regulator explained its ruling by saying, “There are reasonable grounds for believing that the undertakings might be accepted by the CMA under the Enterprise Act 2002.” This may lead to the completion of the acquisitions, which were agreed on 21 January 2020.

UK: The Competition and Markets Authority (CMA) has said that Breedon Group’s acquisition of a minority of Cemex UK’s ready-mix and aggregates operations “may lead to a substantial lessening of competition in the supply of ready-mixed concrete, non-specialist aggregates or asphalt in 15 local markets across the UK” in a letter to the group. The Herald newspaper has reported that the potentially affected markets are in localities where Breedon Group is already dominant, such as eastern Scotland and the East Midlands.

CMA senior director Colin Rafferty said, “As consumers source the majority of these materials locally, it’s vital to ensure that enough competition will remain at the local level so there’s enough choice and prices remain fair.” If it fails to respond to the CMA’s concerns by 2 September 2020, Breedon Group will face an in-depth Phase 2 investigation into the deal.

Namibia: The Namibian Competition Commission has blocked the sale of Ohorongo Cement to China-based West China Cement on the grounds that it would ‘substantially’ reduce competition in the cement market. It warned that it could lead to coordination between Ohorongo Cement and Whale Rock Cement. The commission added that, “no concrete benefit would outweigh the detrimental effects that will result from the implementation of the proposed merger”.

West China Cement agreed to buy a majority stake in the cement company for US$104m from Germany-based Schwenk Zement subsidiary Schwenk Namibia in January 2020. Previously, Singaporean authorities stopped the sale of Schwenk Namibia to Singaporean-based International Cement Group (ICG) in September 2019 due to the latter’s inability to cover the losses of the Namibian company.

Pakistan: The Competition Commission of Pakistan (CCP) has launched an investigation into alleged collusion between cement companies that may have been the cause of a localised cement price spike in northern Pakistan. On 25 July 2020 the Pakistan Bureau of Statistics (PBS) recorded cement price rises of up to 8.9% in Punjab and Khyber Pakthunkhwa compared to a month earlier, according to the Profit newspaper. Officials had predicted a nationwide price drop after the government abandoned the Federal Excise Duty (FED) on cement in June 2020. Prices have decreased by a small margin in the southern regions of Balochistan and Sindh.

The Ministry of Industries and Production previously asked producers to lower cement costs in May 2020 in order to boost construction in the interest of the post-coronavirus lockdown economic recovery.

US: Mexico-based Cemex has announced its investment in Arqlite, a producer of aggregates from waste plastic. Arqlite won the Cemex Ventures Global Construction Startup Competition in 2019. Other investors in the company, which began its research and development process in Argentina in 2016, include Kamay Ventures and Chris Graff.

The Cemex Ventures Global Construction Startup Competition 2020 remains open to applicants until 26 July 2020.

India: Nuvoco Vistas has received approval from the Competition Commission of India for its 100% acquisition of Emami Cement from Emami Group. Reuters has reported that the acquisition, through which Nuvoco Vistas enters the Bihar and Odisha markets, brings its installed cement production capacity to 23.5Mt/yr.

Oman: Cement producers have reacted positively to anti-dumping measures implemented by the Ministry of Commerce and Industry. The Oman Observer newspaper has reported that the measures, which consist of quality screening, have, since coming into force on 1 March 2020, been ramped up in construction, with a general restriction of the movement of goods due to the coronavirus. Raysut Cement said, “These measures will enable Raysut Cement and our peers Oman Cement to operate at full capacity. We hope that the authorities will continue to strictly enforce this measure in the interest of fair market competition.”

Raysut Cement said that it is ‘Aggressively pushing ahead’ with its US$30m Port of Duqm grinding plant project, which is due for commission in March 2021. “It is a good time for countries like Oman to become self-sufficient in the domestic availability of a strategic commodity like cement,” it said. On 4 May 2020 Raysut Cement announced plans to lobby the government for a gas or electricity subsidy.

Oman’s cement demand is currently 20-25% below pre-lockdown levels.

Vietnam: Producers exported approximately 2.82Mt of cement in January and February 2020, down by 49% year-on-year from 5.75Mt in the corresponding period of 2019. Vietnam News has reported that this is a result of the coronavirus outbreak. In February 2020 Vietnam’s Ministry of Construction said that Vietnamese cement exporters would face fierce competition as China and Thailand increase exports over the coming year.

Vietnam Cement Association president Nguyễn Quang Cung previously predicted that Vietnamese cement exports would hold steady at 34.0Mt in 2020 before falling by 26% to 25.0Mt in 2021 as a forecasted rise in domestic demand reduces the reliance on low-priced exports. China remains the primary importer of Vietnamese cement, which it buys at US$36.3/t. Domestic demand fell by 37% year-on-year to 2.88Mt in January 2020 from 5.43Mt in January 2019, according to Arab News.

Production rose by 0.1% year-on-year to 13.0Mt in January and February 2020 from 12.9Mt one year previously.

Australia: Adelaide Brighton’s profit in 2019 was US$31.1m, down by 74% from US$122m in 2018. Sales were down by 7% to US$997m from US$1.07bn. Adelaide Brighton chairman Raymond Barro explained that ‘increased competition and softer demand for construction materials’ locally impacted revenue and earnings. He said that ‘cost pressures across sea freight, transport and raw materials’ caused the dive in profit.

Australia: The Australian Competition and Consumer Commission (ACCC) says that Barro Group’s acquisition of a 43% stake in Adelaide Brighton will not ‘substantially’ lessen competition. The ACCC examined the completed acquisition closely because the two vertically integrated companies have overlap in the market for the supply of cement, ready-mixed concrete and aggregates.

It found Barro and Adelaide Brighton will continue to face competition from Boral, Holcim and Hanson, three large vertically integrated competitors with national operations, along with a number of smaller independent competitors. The ACCC looked at competition impacts on the pre-mixed concrete and aggregates markets in Melbourne, Brisbane and Townsville, where Barro and Adelaide Brighton’s operations overlap and did not identify any areas of concern.

Barro did not seek informal merger clearance from the ACCC prior to acquiring Adelaide Brighton. However, the ACCC says it may reopen its investigation if it receives further information that alters its current conclusions.