Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Canada Competition Bureau accepts Holcim’s asset sale as condition of merger, (May 5, 2015)

By Linda O’Brien, J.D., LL.M.

Swiss building and construction materials maker Holcim Ltd has reached a consent agreement with the Canada Competition Bureau to sell all of its Canadian operations and all associated assets as part of its proposed acquisition of Lafarge S.A. of France in order to resolve the Bureau’s concerns regarding preserving competition for the supply of cement and related products in Canada, the Bureau announced on May 4.

In Canada, Holcim currently employs about 2,600 people, manufacturing cement, aggregates, and ready-mix concrete and provides construction services.

In April 2014, Holcim and Lafarge publicly announced a global merger. As significant manufacturers of cement and related products, Holcim and Lafarge have overlapping operations in the cement, ready-mix concrete, and aggregates businesses in Canada.

Under the agreement, Holcim also will sell one cement plant and five cement terminals in the United States. The sale of the U.S. cement plant is required to allow the Canadian assets to run effectively as a stand-alone business once they are no longer associated with other Holcim assets.

The agreement requires Holcim to sell the assets to a single purchaser or in two packages to two purchasers. The first package includes two cement terminals located in Lethbridge and Edmonton (AB), along with a cement plant located in Three Forks, Montana (U.S.) determined by the Bureau to be essential to Holcim's operations in Alberta. The second package includes Holcim's cement plants located in Joliette (QC) and Mississauga (ON), as well as many cement terminals, ready-mix concrete plants, and other aggregates and construction facilities. It also includes five cement terminals in the northeastern United States.

By requiring the sale of all of Holcim’s Canadian operations and all associated assets, as well as its U.S.-based cement plant, the Bureau was satisfied that the consent agreement would preserve competition in the supply of cement and related products in Canada, according to the Bureau’s position statement.

Since the parties decided to sell all of Holcim's Canadian operations to address competition concerns in Canada, the Bureau's review was focused on determining whether assets located outside of the country were important to the effectiveness of Holcim's Canadian business. In this global transaction, the Bureau coordinated with the U.S. FTC and the European Commission to align its merger review process.

“This merger review demonstrates how the Bureau and its international counterparts can work together to ensure an effective remedy in each jurisdiction and strengthen competition law enforcement partnerships,” said John Pecman, Commissioner of Competition. “I commend the parties for the level of cooperation they provided to the Bureau throughout our review of the proposed transaction and for reaching this agreement, which will preserve competition in the supply of cement and related products throughout Canada to the benefit of Canadian consumers and businesses."

On May 4, Holcim Ltd. and Lafarge S.A. agreed to divest plants, terminals, and a quarry to settle FTC charges that their proposed $25 billion merger would likely harm competition in the United States. According to the FTC complaint (In re Matter of Holcim Ltd., File No. 141-0129), the merger would have harmed competition in 12 markets for portland cement, an essential ingredient in making concrete, and in two additional markets for slag cement, a specialty cement used for making more durable concrete structures.

On April 24, the European Commission (EC) cleared the proposed acquisition of several assets of Holcim and France-based Lafarge by Ireland-based CRH. The action follows the December 2014 approval by the EC of the acquisition of Lafarge by Holcim, conditioned upon the divestment of certain assets. The assets divested by Holcim and Lafarge consist of production facilities of grey and white cement, aggregates, RMX, asphalt, and other construction materials. The facilities are located in France, Germany, United Kingdom, Hungary, Slovakia, and Romania.

Companies: Holcim Ltd.; Lafarge, SA

News: AcquisitionsMergers Antitrust