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European Commission - Press release

Mergers: Commission approves acquisition of Lafarge by Holcim, subject to conditions

Brussels, 15 December 2014

The European Commission has found the proposed acquisition of Lafarge of France by Holcim of Switzerland to be in line with the EU Merger Regulation. Both companies are active worldwide in the manufacture and supply of cement, ready-mix concrete, aggregates and other construction materials. The decision is conditional upon the divestment of Lafarge businesses in Germany Romania and the UK and of Holcim operations in France, Hungary, Slovakia, Spain and the Czech Republic. The Commission had concerns that the transaction, as originally notified, would have had a detrimental effect on competition in a significant number of markets in the European Economic Area (EEA). The commitments offered by the two companies address these concerns.

The proposed transaction concerns assets worth several billion euros and will create the world's largest cement producer with operations in 90 countries. The Commission has carefully reviewed its impact on competition in Europe. As most construction materials, such as cement, aggregates, ready-mix concrete, are sold within a short distance from the site where they are manufactured, the Commission has focussed its assessment on the transaction's specific impact on customers located near Holcim and Lafarge's production facilities.

The Commission's assessment has revealed that the merged entity would have faced insufficient competitive pressure from remaining players in many markets. This would have brought a risk of price rises.

In order to prevent a negative impact on competition, the companies committed to divesting most of the operations where their activities overlap. This comprises assets as well as the services necessary for the viability of the assets.

Holcim and Lafarge will not be allowed to close their deal until the Commission has approved the buyer(s) of the assets put up for sale.

Commissioner in charge of competition policy, Margrethe Vestager said "Vibrant competitive markets in the construction sector are crucial for the Commission's ambition of boosting investments. The remedy package in this case is very substantial. But that was necessary to allow a clear cut decision already in first phase. I am confident that this will allow the merger to proceed without compromising the interests of the customers in this sector".

The assets to be divested include ready-mix concrete plants, aggregates quarries, integrated cement plants (which cover the entire cement production process from the extraction and transformation of limestone into clinker and its grinding into cement), grinding stations (which only carry out the final part of the process, i.e. the grinding of clinker into cement), as well as cement terminals (where large quantities of cement are transported from other facilities and stocked to be sold locally). Services include central functions (such as management, IT services, research and development) and alternative fuel resources relating to the use of processed waste as an alternative to conventional fuel to reduce operational costs.

  • In Germany, Lafarge will divest the entirety of its business activities, including cement plants in Karsdorf and Wössingen and a grinding station in Sötenich.
  • In Romania, Lafarge will divest the entirety of its business activities including cement plants in Medgidia and Hoghiz, a grinding station at Targu Jiu, the SICIM terminal and terminals in Cluj and Glina.
  • In Slovakia, Holcim will divest the entirety of its business, including cement plants in Turna and Rohožnik, and all its operating assets in Hungary, including terminals in Ercsi and Békéscsaba.
  • In France, Holcim will divest most of its activities relating to cement, RMX and aggregates, including cement plants at Héming, Lumbres and Rochefort-sur-Nenon, grinding stations at Dannes, Dunkerque (slag grinding station), Grand-Couronne, La Rochelle and Ebange, an import terminal at Dunkerque. Lafarge will divest a grinding station and the whole of its business activities in Réunion, except its shareholding in the Ciments de Bourbon grinding station.
  • In the UK, Lafarge will divest the entirety of the business activities carried out through Lafarge Tarmac, a joint venture with Anglo American, except the Cauldon cement plant in Staffordshire. The parties have committed to ensure that any purchaser of the Lafarge Tarmac business will satisfy the criterion set out in the UK competition authority's report of January 2014 on aggregates, cement and ready-mix concrete. This will allow for the entry of a fifth independent domestic producer of cement in the UK. The Commission will assess the adequacy of potential buyers.
  • Holcim will also divest the entirety of its business activities in the Czech Republic, as well as the Gador plant and the Yeles grinding station in Spain. The sale of Holcim's Czech and Spanish assets to the Mexican cement manufacturer Cemex was the object of earlier decisions of the Czech competition authority and the Commission respectively.

The Commission found that these commitments address the identified competition concerns. The Commission therefore concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. The decision is conditional upon full compliance with the commitments.

In this respect, Commissioner Vestager stated: "With the remedies, we have ensured that the creation of an increased global footprint of the group will not come at the expense of competition in the EU. And this is the positive example today’s approval provides to other companies that may have global ambitions ".

The Commission maintained close cooperation with Member States' competition authorities during its investigation. The Commission also had contacts with a number of third country competition authorities, including the US and Canada, which are also examining the proposed transaction.

The transaction was notified to the Commission on 27 October 2014.

Companies and products

Holcim, based in Switzerland, is a global producer of building construction materials including cement, aggregates, ready-mix concrete, asphalt and cementitious materials. Holcim operates in more than 70 countries, generates an annual turnover of more than € 16 000 million euros, and has approximately 71 000 employees.

Lafarge is based in France and is also active worldwide in the supply of cement, RMX, aggregates and other construction materials. Lafarge is active in 64 country, generates an annual turnover of more than € 15 000 million and employs 65 000 people.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

More information will be available on the competition website, in the Commission's public case register under the case number M.7252.

IP/14/2683

Press contacts

Ricardo CARDOSO (+32 2 298 01 00)
Carolina LUNA GORDO (+32 2 296 83 86)

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