Concrete Products is the leading source for Concrete Plants, Concrete Mixers, Precast, and Ready Mix news.

Cemex, Heidelberg incur antitrust policy on both sides of the Atlantic

Judging by the positive effect he and cabinet members have had on business beyond stock market metrics, President Donald Trump had cause to march toward his 100th day in office confident and content. Consider “Back to Basics,” a proclamation Environmental Protection Agency Administrator Scott Pruitt outlined last month for a group of coal miners unaccustomed to friendly visits from White House representatives; or, House Joint Resolution 37, whereby President Trump and Capitol Hill allies have kneecapped aspects of Barack Obama’s Fair Pay and Safe Workplaces Executive Order, which stymies competition in federal project contracting.

Another agency executing White House directives, the Federal Trade Commission, detailed a new philosophy on core activities like merger and acquisition review, intent on eliminating “wasteful, legacy regulations and processes that have outlived their usefulness” (page 23). FTC Bureaus of Competition and Consumer Affairs moves dovetail two deals—one likely, the other squelched—between HeidelbergCement AG and Cemex S.A.B. de C.V. Nearly 10 years on from their Hanson Plc and Rinker Group takeovers, both companies continue to sharpen North American and overseas cement, aggregate and ready mixed concrete holdings.

Through Lehigh Hanson and its Pacific Northwest business, Cadman Materials Inc., HeidelbergCement is the latest suitor for Cemex USA assets. A mid-April agreement will see Cadman add 14 ready mixed, aggregate and asphalt operations in Washington and Oregon, netting Cemex proceeds on top of those from recent deals with Eagle Materials, GCC of America, Oldcastle Architectural and Quikrete Holdings.

The Pacific Northwest properties accompanied Rinker Materials, which Cemex acquired two years after RMC Group. The latter was the source of three Cemex Croatia cement plants that Duna Dráva Cement (DDC)—an import-driven joint venture Heidelberg and German peer Schwenk operate in Croatia—was set to acquire until the European Commission (EC) weighed in. Less than two weeks before the Pacific Northwest agreement, the EC barred the Cemex Croatia sale, citing the European Union Merger Regulation and concern that the transaction would significantly reduce competition in gray cement markets.

“We had clear evidence this takeover would have led to price increases in Croatia, which could have adversely affected the construction sector,” noted Commissioner and Competition Policy Head Margrethe Vestager. In light of the companies’ only proposed nod to regulators—the opening of a cement terminal to potential competitors—she added, “HeidelbergCement and Schwenk failed to offer appropriate remedies ... Therefore, the Commission has decided to prohibit the takeover to protect competitive markets for Croatian customers and businesses. We will continue enforcing competition rules equally across the European Union, no matter where companies are based.”

The Commission paints Cemex Croatia as the largest cement producer in a country where DDC and HeidelbergCement are the top importers, sourcing powder from plants in Italy, Hungary and Bosnia-Herzegovina. Transfer of Cemex Croatia to DDC, the EC contends, would eliminate “competition between companies that were competing head-to-head for the business of Croatian cement customers and could have led to a dominant position in the markets. The combined shares of the parties would have been around 45–50 percent in the markets and reached more than 70 percent in parts.”

While the Cemex Croatia and Cadman-bound Pacific Northwest plants represent different asset classes and warrant specific criteria for regulators measuring competitive effects, it is no surprise that two companies entrenched in economies subject to EC and Trump administration oversight would hit red and (probable) green lights, respectively, on the road to business efficiency and shareholder returns.