Holcim Ltd. and Lafarge S.A. have agreed to divest plants, terminals, and a quarry to settle Federal Trade Commission charges that their proposed $25 billion merger creating the world’s largest cement manufacturer would likely harm competition in the United States.
According to a complaint filed by the FTC, the merger of Holcim, a Swiss company, and Paris-based Lafarge, would have harmed competition in 12 markets for portland cement, an essential ingredient in making concrete, and in two additional markets for slag cement, a specialty cement used for making more durable concrete structures.
Because cement products are heavy and relatively cheap, transportation costs limit their markets to local or regional areas. The complaint alleges that the proposed acquisition would likely substantially lessen competition in the following 12 geographic markets for portland cement: Minneapolis-St. Paul, Minnesota; Duluth, Minnesota; western Wisconsin; eastern Iowa; Memphis, Tennessee; Baton Rouge, Louisiana; New Orleans, Louisiana; Detroit, Michigan; Grand Rapids, Michigan; northern Michigan; western Montana; and Boston, Massachusetts-Providence, Rhode Island. The complaint also alleges that the merger would likely harm competition in two regional markets for slag cement: the Mid-Atlantic and the western Great Lakes. In each of these markets, Holcim and Lafarge are either the only two significant suppliers, or two of, at most, four significant suppliers.
Under the terms of the proposed consent agreement, Lafarge has agreed to divest to Continental Cement Company its Davenport cement plant and quarry in Buffalo, Iowa; and its cement terminals and other distribution assets in Minneapolis – St. Paul, Minnesota; La Crosse, Wisconsin; Memphis, Tennessee; and Convent and New Orleans, Louisiana.
Holcim will divest:
- to Eagle Materials Inc. its Skyway slag cement plant in Chicago;
- to Essroc Cement Corporation its slag cement plant located in Camden, New Jersey and its terminal near Boston;
- to Buzzi Unicem USA its cement terminals in Grandville and Elmira, Michigan and Rock Island, Illinois;
- and to a buyer or buyers to be approved by the FTC its Trident, Montana cement plant and two related terminals in Alberta, Canada; and its Mississauga cement plant in Ontario, Canada and related cement terminals in: Duluth, Minnesota; Detroit and Dundee, Michigan; Cleveland, Ohio; and Buffalo, New York.
The FTC staff cooperated closely with the Canadian Competition Bureau (“CCB”) throughout this investigation. In particular, the post-order divestiture of Holcim’s Trident and Mississauga plants and related terminals in the United States and Canada, which remedy competitive concerns in northern U.S. markets, is part of a larger group of Holcim assets located in Canada that Holcim and Lafarge have agreed to divest to address competitive concerns raised by the CCB. Commission staff worked closely with staff from the CCB to reach outcomes that benefit consumers in the United States. The FTC acknowledges the exemplary work done by the CCB, which led to compatible approaches on an international scale.
The proposed consent agreement includes a hold separate order to ensure that Holcim and Lafarge continue to act independently and maintain the relevant assets until they are divested. The proposed consent agreement also allows the Commission to appoint a monitor to oversee the merging parties’ compliance with their obligations under the settlement agreement. Further details about the divestitures are set forth in the analysis to aid public comment for this matter.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 4-1, with Commissioner Joshua D. Wright voting no. The Commission issued a statement, and Commissioner Wright issued a statement dissenting in part and concurring in part. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Wednesday June 4, 2015, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.
The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.