The European Commission said on Wednesday it is investigating plans by Cemex and Holcim over a Spanish deal because of competition issues.

"The Commission has concerns that the transaction may reduce competition in certain areas of Spain where the two companies' activities overlap," the EU executive said in a statement.

Removing Holcim from the Spanish market “could facilitate coordination” between cement makers, the statement added. Collusion on pricing and customer allocation “could become more effective and sustainable” with fewer rivals that act in a more similar way, regulators said. The EU cited similar concerns over shrinking competition when it started an in-depth investigation into a separate German deal between Holcim and Cemex last year.

In August last year the two cement majors reached an agreement to conduct a series of transactions to swap and combine assets in parts of Europe with the aim of improving synergies and boosting operating profit.

In Spain, Cemex and Holcim will combine all their cement, ready-mix and aggregates operations, allowing the two group’s to benefit from synergies in this troubled European market. Cemex will have a 75 per cent controlling interest over the combined operational assets in the country. Holcim will remain a shareholder for at least five years.