Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Cement manufacturers to divest assets to settle FTC merger charges, (May 4, 2015)

By Linda O’Brien, J.D., LL.M.

Cement manufacturer Holcim Ltd. and Lafarge S.A. have 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, the agency announced today (In re Matter of Holcim Ltd., File No. 141-0129).

According to the FTC complaint, the merger of Holcim, a Swiss company, and Lafarge of France, 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.

Because cement products are heavy and relatively cheap, transportation costs limit their markets to local or regional areas. The complaint alleges that the proposed acquisition would likely substantially lessen competition in the following 12 geographic markets for portland cement: Minneapolis-St. Paul, Minnesota; Duluth, Minnesota; western Wisconsin; eastern Iowa; Memphis, Tennessee; Baton Rouge, Louisiana; New Orleans, Louisiana; Detroit, Michigan; Grand Rapids, Michigan; northern Michigan; western Montana; and Boston, Massachusetts-Providence, Rhode Island. The complaint also alleges that the merger would likely harm competition in two regional markets for slag cement: the Mid-Atlantic and the western Great Lakes. In each of these markets, Holcim and Lafarge are either the only two significant suppliers, or two of, at most, four significant suppliers.

Under the terms of the proposed consent agreement, Lafarge has agreed to divest to Continental Cement Company its Davenport cement plant and quarry in Buffalo, Iowa; and its cement terminals and other distribution assets in Minneapolis - St. Paul, Minnesota; La Crosse, Wisconsin; Memphis, Tennessee; and Convent and New Orleans, Louisiana.

Holcim will divest (1) to Eagle Materials Inc., its Skyway slag cement plant in Chicago; (2) to Essroc Cement Corporation, its slag cement plant located in Camden, New Jersey, and its terminal near Boston;(3) to Buzzi Unicem USA, its cement terminals in Grandville and Elmira, Michigan and Rock Island, Illinois; and (4) to a buyer or buyers to be approved by the FTC, its Trident, Montana cement plant and two related terminals in Alberta, Canada; and its Mississauga cement plant in Ontario, Canada and related cement terminals in: Duluth, Minnesota; Detroit and Dundee, Michigan; Cleveland, Ohio; and Buffalo, New York.

The proposed consent agreement includes a hold separate order to ensure that Holcim and Lafarge continue to act independently and maintain the relevant assets until they are divested. The consent agreement also allows the Commission to appoint a monitor to oversee the merging parties’ compliance with their obligations under the settlement agreement.

The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment through June 4. Interested parties can submit comments electronically.

On April 24, the European Commission cleared the proposed acquisition of several assets of Holcim and Lafarge by Ireland-based CRH. The action followed 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

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