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Concerns raised over Breedon and Hope deal

The Competitions and Market Authority (CMA) are set to investigate Breedon’s anticipated purchase of Hope with concerns being raised about the lessening of competition leading to price hikes for customers.

Breedon Aggregates Limited and Hope Construction Materials Limited are producers and suppliers of aggregates and ready-mixed concrete (RMX), with the companies between them operating over 200 RMX sites across England, Wales and Scotland.

Following its initial investigation, the CMA has found that the prospective deal raises competition concerns in relation to 27 RMX sites, potentially resulting in higher prices for customers using these sites.

However, the CMA found no competition concerns over the production and supply of aggregates or any potential problems in restricting the supply o these products to rival suppliers.

A phase 2 investigation made up of an independent group of CMA panel members will now follow unless Breedon are able to address the authority’s concerns. The company have until 19 April to offer acceptable undertakings to head off this process.

Sheldon Mills, CMA Senior Director of Mergers, and decision-maker in the initial investigation, said: “Ready-mixed concrete is an essential product for a wide range of construction projects of all sizes in the public and private sectors. The vast majority of the merger raises no concerns but there are a number of areas where the companies compete strongly with each other for customers and the concern is that the loss of such rivalry could lead to price rises for customers. The businesses may now resolve these concerns or face a detailed investigation.

In response to the CMA’s findings, Breedon issued a statement saying: “This outcome is in line with Breedon’s expectations and the Company now has a short period during which to offer remedies to address the CMA’s outstanding concerns.  Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later this summer in line with previous guidance.”