Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: FTC requires divestment of plants and quarries in CRH acquisition of Ash Grove Cement Company, (Jun 15, 2018)

By Jody Coultas, J.D.

Ireland construction company CRH plc as agreed to divest certain plants and quarries in three states to settle charges filed by the FTC that CRH’s proposed acquisition of Kansas construction company Ash Grove Cement Company, the FTC announced. The FTC has alleged that the proposed $3.5 billion acquisition would harm competition in cement, sand and gravel, and crushed limestone markets in Montana, Nebraska, and Kansas, reducing the number of significant competitors in each relevant market, increasing the likelihood that the merged company would unilaterally exercise market power, and forcing consumers to pay higher prices. The proposed divestments eliminate the competitive concerns by requiring the parties to divest assets in each relevant market (In the Matter of CRH plc, FTC File No. 171 0230).

Both companies manufacture and sell portland cement, sand and gravel, and crushed limestone. The FTC alleged that Dublin-based CRH’s proposed acquisition of its Kansas competitor will harm competition in the markets for portland cement in Montana; sand and gravel in the Omaha, Nebraska/Council Bluffs, and Iowa regions; and crushed limestone in the Johnson County, Kansas region. Because sand and gravel has no close substitutes in the Omaha, Nebraska/Council Bluffs, and Iowa regions, and because the parties are the two leading suppliers of sand and gravel, customers are unlikely to switch to other products when faced with a small but significant price increase. Also, there is no close substitutes for crushed limestone in the Johnson County, Kansas market, making it unlikely that consumers would switch to other products in the event of a small but significant price increase, according to the complaint.

Under the terms of the agreement reached by the parties, CRH is required to divest its cement plant and quarry in Three Forks, Montana to Grupo Cementos de Chihuahua, or GCC, a Mexican multinational corporation and experienced producer of cement, aggregates, and other construction materials. Because the CRH cement plant in Montana currently sells a significant amount of cement into Canada through two CRH terminals in Alberta, GCC will have the option to use those terminals for three years. CRH also has agreed to purchase, at GCC’s option, cement produced at the plant for distribution in Canada for up to three years. In Omaha, Nebraska, CRH is required to divest two sand-and-gravel operations and one sand-and-gravel pit to Martin Marietta Materials, Inc. CRH is required to divest a hot-mix asphalt plant and two limestone quarries in Olathe, Kansas, as well as another hot-mix asphalt plant and another limestone quarry in Louisburg, Kansas, to Summit Materials, Inc.

Companies: CRH plc; Ash Grove Cement Company

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