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LONDON (Alliance News) - Breedon Aggregates Ltd Wednesday said it will dispose of a ready-mixed concrete plant in the Peterhead area and an asphalt plant in the Aberdeen area, both in Scotland, as the UK regulator moved to preserve competition.
The Competition and Markets Authority (CMA), which is taking the measures after an inquiry into Breedon's acquisition of a package of assets from Aggregate Industries UK Ltd, said the company also will face price controls on asphalt produced in the Inverness area.
Having taken over the case from the Competition Commission, the CMA found that the acquisition would lead to a reduction of competition in three areas of north-east Scotland.
Breedon completed the acquisition in April 2013, which included 11 aggregate quarries, 4 asphalt plants, 9 RMX plants and 2 concrete block factories, located at 18 sites in north Scotland.
Prior to the acquisition Breedon already was the largest supplier of these products in north-east Scotland.
In its final report, the CMA said that asphalt customers in Aberdeen and Inverness, as well as RMX customers in Peterhead, could face higher prices due to the loss of competition and lack of alternative suppliers.
The CMA it will require Breedon to sell either the Tom's Forest or Craigenlow asphalt plant and one of the Peterhead or Stirlinghill RMX plants to a competitor.
The competitor will be approved by the CMA.
Because the competition concerns in relation to the asphalt market in Inverness are expected to be short term, asphalt supplied by the company will be subject to a price control in that area until 2018 at the latest, the CMA said.
"The markets for these products are local so the loss of a competitor in even a relatively small area matters when the cost and proximity of the production site are the most important factors for customers and in a market where most prices are negotiated," Simon Polito, chairman of the Inquiry Group and CMA deputy chair, said in a statement.
Breedon said it will work with the CMA to finalise the terms of the divestments and undertakings within 12 weeks.
"Breedon has every intention of reaching agreement with the CMA as quickly as possible, in order that it can expedite the sale of the assets concerned and proceed with the full integration of the former AI businesses," the company said in a statement.
The CMA, which is responsible for investigating mergers, markets and the regulated industries and enforces consumer and competition law, was formed on April 1 when the UK Competition Commission joined with the competition and some consumer functions of the Office of Fair Trading.
In February, the Competition Commission had provisionally found that some customers could face higher prices after Breedon's acquisition of the package of assets from Aggregate Industries UK Ltd.
Breedon shares were Wednesday quoted at 47.00 pence, up 0.3%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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