Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC approves Cemex’s acquisition of Holcim assets in Spain, (Sep 9, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) announced today that it has cleared under European Union (EU) merger regulations the proposed acquisition of the Spanish operations of the Swiss building materials group Holcim by its Mexican rival Cemex. Cemex and Holcim are global suppliers of cement and other building materials. The Holcim assets comprise plants and quarries dedicated to the production and supply of cement, aggregates, ready-mix concrete and mortar in Spain. The EC concluded that the acquisition would not raise competition concerns since the merged entity will continue to face sufficient competition from its rivals in all markets concerned.

The transaction was notified to the Commission on February 28, 2014.

In April 2014, the Commission opened an in-depth investigation over concerns that the proposed transaction could substantially lessen competition in the market for grey cement by removing Holcim assets as an actual competitor in eastern Spain. The EC also was concerned that the proposed transaction could facilitate existing coordination between grey cement producers in central Spain or make future coordination more likely.

As regards eastern Spain, the in-depth investigation has shown that the merged entity will continue to face competition from a number of players in the various geographic markets around the parties' grey cement production facilities in this region. The in-depth investigation has shown that these rivals, most notably because of the level of their spare cement production capacity, can be expected to exert a sufficient competitive constraint on the merged entity.

As regards central Spain, the Commission found that certain features of the grey cement markets under investigation make them prone to coordination. However, the EC ultimately concluded that the proposed acquisition was unlikely to result in making any potential coordination between grey cement producers in this area easier, more stable or more effective. Moreover, the Commission also concluded that competitors will not be more likely to engage in coordination as a result of the proposed transaction.

Cemex, which is headquartered in Mexico, is a global building materials company active in cement, ready-mix concrete, aggregates and related building materials. Holcim, which is headquartered in Switzerland, is a global supplier of cement, aggregates, ready-mix concrete as well as asphalt and cement materials with operations in more than 70 countries.

The Cemex/Holcim assets transaction is linked to two other transactions between Holcim and Cemex. Through the first related transaction, Cemex intends to acquire control of the whole of Holcim's activities in cement, ready-mix concrete, and aggregates in the Czech Republic. This operation was cleared by the Czech competition authority in March 2014 after an in-depth review. In another linked transaction, Holcim intends to acquire certain assets of Cemex located in western Germany. The Commission approved that transaction in June 2014 also following an in-depth investigation.

The Cemex/Holcim assets transaction does not meet the turnover thresholds of the EU Merger Regulation. However, following a referral request from Spain, the Commission agreed to assess the transaction related to Spain.

Companies: Cemex; Holcim

News: Antitrust