Download DOC - Europa EU

IP/01/574
Brussels, 18 April 2001
Commission launches in-depth investigation into
acquisition of Addtek by CRH in the construction
sector
The European Commission has today decided to open an in-depth
investigation into the planned acquisition by Ireland’s CRH Plc of Finnishbased Addtek International Oy Ab. At this stage, the Commission has
concerns that the deal could significantly reduce competition and, therefore,
translate in higher prices in a number of products, mainly in precast concrete
floors in Finland and in the Netherlands.
CRH is an international group based in Ireland which produces and distributes
building materials (such as cement, aggregates and ready-mixed concrete), as well
as precast concrete products for the construction sector (such as precast concrete
floors, walls and building structures). CRH is present in the Finnish building
materials market via two subsidiaries: Finnsementti Oy, which produces grey
cement, and Lohja Rudus Oy, which is active in aggregates and ready-mixed
concrete. CRH is also active in the Dutch construction flooring market via its
subsidiary Dycore B.V.
Addtek is the largest manufacturer of precast concrete products in Europe. In
precast concrete, the biggest product group is prestressed hollow-core floor
elements, followed by beams, columns and walls. Precast concrete is also used in
infrastructure works including railway sleepers and structures for bridges and
tunnels. Addtek is active in the Finnish market of precast concrete products via
Parma Betonila Oy, which it controls jointly with the Heidelberger group. Addtek is
also active in the Dutch construction flooring market via its subsidiaries Verenigde
Bouwproducten Industrie B.V. (VBI) and Spanbeton B.V.
In the Netherlands, CRH’s and Addtek’s activities overlap in precast concrete
floors. In Finland, a vertical relation arises between CRH’s activities in building
materials (grey cement, aggregates and ready-mixed concrete) and Addtek’s
activities in precast concrete elements.
The Commission’s initial one-month investigation indicated that precast concrete
floors and other elements, such as structures, walls and railway sleepers, are a
distinct product market from other materials, such as cellular concrete, steel and
wood. The review further suggested that floors and other elements cast in situ (that
is, cast on the building site itself using ready-mixed concrete) are not a substitute
for precast concrete elements. In this respect, the investigation shows that precast
concrete elements have specific advantages in terms of building site logistics, as
they allow for a speedy construction process at the building site. Casting in situ
takes longer because on-site construction work (such as timbering and support
structures) is required and concrete may take weeks to dry. Casting in situ is also
more labour intensive than constructing with precast elements.
In the Netherlands, the combined market position of CRH and Addtek in precast
concrete floors would appear to give rise to competition concerns, especially as
their closest competitors are significantly smaller than the resulting merged entity.
This is particularly the case for hollow-core floor elements.
In Finland, CRH is the only producer of grey cement via its subsidiary Finnsementti
Oy. Addtek’s Parma Betonila Oy, on the other hand, has a very high market share
in precast concrete floors and is by far the largest producer of precast concrete
structures, both big users of grey cement. Following the operation, the new entity
would largely control the grey cement supplies in Finland while at the same time
have a very strong position in precast concrete floors and structures. The
Commission considers, at this stage, that it is necessary to thoroughly investigate
whether CRH has the incentive and the means to place its downstream
competitors in the domain of precast concrete floors and structures at a competitive
disadvantage, for example by playing on the supply conditions of grey cement to
these competitors, thus creating problems in their production process, or by crosssubsidizing its own downstream subsidiary. Based on the information currently
available, the Commission considers that imports, which originate mainly from
Russia and the Baltic States, are not a full substitute to Finnsementti’s grey cement
to CRH’s downstream precast concrete competitors, due to the problems related to
quality and supply security.
Therefore, the Commission considers that the operation raises serious competition
concerns in the market for precast concrete floors in the Netherlands, the markets
for precast concrete floors and precast concrete structures in Finland and as
regards CRH’s position in grey cement in Finland.
A large number of customers and competitors have expressed serious concern
over the notified operation. Negative competition effects are expected especially by
small and medium sized competitors.
According to the European Union’s merger regulation, the Commission has now a
maximum of four months to conduct a further investigation and reach a final
decision. The opening of an in-depth review does not prejudge the final outcome of
the case and respects the rights of the merging and other interested parties to be
heard.
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