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Brussels, 7 August 2007

Mergers: Commission approves proposed acquisition of Hanson by HeidelbergCement

The European Commission has authorised under the EU Merger Regulation the acquisition of Hanson PLC, a British company active in aggregates and other building materials, by HeidelbergCement AG, a German cement producer. After examination, the Commission concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or in a substantial part of it.

HeidelbergCement is active in nearly all EEA countries in the cement, ready-mixed concrete and related building materials markets.

Hanson mainly focuses on aggregates and aggregates-based building products. In Europe, Hanson's activities are concentrated in the UK, with some operations in the Benelux area, Germany, the Czech Republic and Spain. Hanson is not active in cement, which is one of the two main constituents of concrete, the other one being aggregates.

The activities of the two companies are essentially of a complementary nature, notably in the UK where Hanson produces aggregates and concrete while HeidelbergCement is only active in cement production.

The Commission’s examination of the proposed transaction showed that the horizontal overlaps between the activities of HeidelbergCement and Hanson are limited and that, for all markets concerned, the combined firm would continue to face strong competitors with significant market shares.

The Commission also assessed the vertical relationships created by the proposed transaction, in particular between HeidelbergCement's cement activities and Hanson's concrete and aggregates businesses. The Commission concluded that there would be no risk of closing off competitors from supply, mostly in view of the existence of strong vertically-integrated rival cement producers and the fragmentation of the aggregates and concrete markets.

The Commission further investigated the market for ground granulated blast furnace slag ("GGBS") in the UK in order to take into account national specificities as regards cementitious products. GGBS is a by-product of the iron and steel industry which can substitute cement to a certain extent for concrete production. Another such partial substitute for cement is fly ash, a by-product of coal combustion in power plants. Although not the only player on the GGBS market in the UK, Hanson is the only domestic producer of GGBS in the UK, and has a very significant market share. However, the Commission found that Hanson's high market share, even combined with HeidelbergCement's cement activities in the UK, would nevertheless not result in a lessening of competition on the connected markets, notably because of the possibility to substitute GGBS in most applications by cement or fly ash and the availability of in-house GGBS or alternative GGBS sources for the main competitors in these markets.
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