RSSCo-ordination between
The CC’s findings do not relate to explicit collusion between the three heavyweight cement producers. But, as the cement market is highly concentrated with only four (
The CC says it is now looking at a variety of measures aimed at increasing competition in the UK cement market. These include the requirement for one or more of the top three cement producers to divest cement and ready-mix concrete production capacity; the creation of a cement buying group or groups; banning British cement producers sending generalised price announcement letters to customers; and placing restrictions on the disclosure of cement market data by the UK Government and by British cement producers to private sector organisations.
“We have provisionally found some serious problems with the way the cement market operates in GB,” said Professor Martin Cave, Competition Commission deputy chairman and inquiry group head.
“There are only four cement producers in the UK and one of those is a new entrant to the market.
“This concentration — and the close links between the producers at many levels — along with industry practice, has for a long time given GB producers detailed awareness of how their counterparts are performing, as well as of their future pricing strategy.
“Established information channels such as price announcement letters can signal their plans, and tit-for-tat behaviour and cross-sales can be used to prevent or retaliate against any moves to disturb the overall balance between the different players in this market.
“They have also been in a position to increase the already significant barriers that exist for new entrants.
“Our finding does not mean they are explicitly colluding or operating a cartel because there are already several ways of communicating each other’s intentions without the need for specific discussions,” he said.
“Given the extent of the problems we have found, we feel that hard-hitting measures may be necessary to open up the cement market to greater competition by transforming existing structures and behaviour.”
Cave said that the “fundamental importance” of cement to construction and building and the amount of such work that is funded by the public purse only underlined the need for tough action.
“Our initial assessment is that these problems could have cost GB consumers around £180m over the period 2007 to 2011, and we also believe this could be an underestimate,” he concluded.
The CC is required to publish its final report by 17 January 2014 and is now inviting responses. Any interested party is invited to respond to the provisional findings and notice of potential remedies by 12 June 2013.