Sika AG and MBCC Group have asked the UK’s Competition & Markets Authority (CMA) to consider a “fast-track” remedy to address concerns that their merger could harm the construction industry in the UK.
In November 2021 Swiss firm Sika agreed to buy the German-based MBCC Group in a GBP4.5bn (US$5.1bn) deal. Sika and MBCC are the two largest UK suppliers of chemical admixtures used in the production of cement. Together they account for over half of the UK supply.
Following an initial Phase 1 investigation, the CMA identified competition concerns in the supply of chemical admixtures in the UK. As a result, the CMA referred the deal for an in-depth Phase 2 investigation in August 2022. Early in the Phase 2 investigation, the two businesses conceded that the deal raises competition concerns and asked the CMA to “fast-track” the case to the assessment of a remedy that could address those concerns.
The CMA accepted the businesses’ request and has provisionally found that the deal could reduce competition. Without remedies to restore this loss of competition, the deal could reduce the level of innovation, services and quality available to concrete producers, as well as leading to higher prices.
To address this, the merging businesses have now proposed to sell MBCC’s chemical admixtures business in the UK, Europe and several other countries.
The next stage of the CMA’s investigation will now focus on assessing whether this will fully replace the loss of competition arising from the merger, and the CMA is currently consulting on the remedies that have been proposed. Richard Feasey, independent CMA panel chair, said: “The firms accept that the merger could reduce competition in the UK chemical admixture market. If it were to go ahead without a remedy, this could lead to higher prices for UK concrete producers and less innovation, lower service levels and poorer quality. The next stage of our investigation is focussed on making sure that any remedy properly addresses these concerns to avoid any adverse impact for UK businesses and consumers.”
The CMA is asking for views on the remedy offered by 4 November 2022 and on its provisional findings by 15 November 2022. The statutory deadline for the CMA’s final report is 24 January 2023.
