Proposed Merger between Holcim Ltd. and Lafarge S.A.

Notifying Parties:

Holcim Ltd. and Lafarge S.A.

Notifying Date:

11 July 2014

Summary of transaction:

PART 5
INFORMATION FOR THE CCS PUBLIC REGISTER
(TO BE COMPLETED BY THE APPLICANT(S))

Please provide a comprehensive, non-confidential summary of the merger including at least the following information:

(i)       the names of the merger parties;

- Holcim Ltd. (“Holcim”); and

- Lafarge S.A. (“Lafarge”),

(collectively, the “Parties”).

 (ii)      a description of the transaction;

This is a joint notification made by Holcim and Lafarge, in relation to the merger of Holcim and Lafarge following a public exchange offer made by Holcim in accordance with the provisions of French tender offer rules to acquire all of the issued and outstanding shares of Lafarge (“Merger”).  

(iii)     a description of the business activities of the merger parties worldwide and in Singapore;

Holcim’s core businesses are the manufacture and supply of cement, and the production, processing and distribution of aggregates, ready-mix concrete and asphalt. Holcim also offers consulting, research, trading, engineering and other services.

Holcim’s subsidiary in Singapore, Holcim (Singapore) Limited (“Holcim Singapore”) manufactures and supplies ready-mix concrete to customers in Singapore. Apart from ready-mix concrete, Holcim Singapore also manufactures and supplies conwood and drymix products, such as floorings, mortar for concrete repair and reinforcement and tile adhesives etc. Holcim Singapore also imports grey cement which is used primarily for its internal consumption only, for its ready-mix concrete and dry-mix mortar production, and which may be supplied to third party customers in Singapore only in limited instances.

Lafarge is involved in the manufacture and supply of cement, aggregates, ready-mix concrete, additives, mortar, asphalt and other pre-cast concrete products. Lafarge primarily produces and sells cement, aggregates and ready-mix concrete worldwide.

Lafarge’s subsidiary in Singapore, Lafarge Cement Singapore Pte Ltd (“Lafarge Singapore”) imports and supplies grey cement as well as aggregates into Singapore. The aggregates are used solely for its ready-mix concrete production, and are not sold to third party customers in Singapore.

Lafarge Singapore also manufactures and supplies ready-mix concrete to customers in Singapore. Lafarge’s ready-mix concrete business in Singapore is operated through Alliance Concrete Singapore Pte. Ltd., which is a tripartite equal shareholding joint venture between Asia Cement (Singapore) Private Limited, SINHENGCHAN Concrete Pte. Ltd. and Supermix Concrete Pte. Ltd. (a subsidiary of Lafarge).

(iv)     a description of the overlapping goods or services, including brand names;

With respect to Singapore, Holcim and Lafarge overlap in the manufacture and supply of ready-mix concrete, and to a limited extent, in the supply of grey cement.

Indeed, while Holcim supplies grey cement to third party customers in Singapore, such supply occurs only in limited instances. Grey cement is imported by Holcim primarily for its internal consumption only.

(v)     the applicant’s views on:

a.  definition of the relevant market(s);

b.  the way in which competition functions in this market;

c.  barriers to entry and countervailing buyer power; and

d.  the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

The Parties submit that the relevant markets are the supply of (i) grey cement in Asia and (ii) ready-mix concrete in Singapore.

The Parties also submit that the Merger will not result in a substantial lessening of competition in either markets in view of factors, including the following:

Non-coordinated effects

(a)  the absence of market power by the merged entity post-Merger;

(b)  The multitude of competitors that currently exists in the relevant markets;

(c)  The ability of customers to easily switch between suppliers;

(d)  the ease and likelihood of entry by potential competitors into the relevant markets; and

(e)  the inability to unilaterally affect prices in view of the strong influence of macroeconomic factors; and

Coordinated effects

(f)  there are numerous competitors of varying sizes such that participating firms are unlikely to be able to align themselves on terms of coordination, and difficulty to monitor compliance;

(g)  the excess capacity and incentives by market players to ramp-up to absorb demand from switching customers; and

(h)  potential for new entry which creates disruptive effects and reduces sustainability of any coordinated behaviour.

Decision:

The proposed merger, if carried into effect, will not infringe the section 54 prohibition..

Decision Date:

22 August 2014
Click here for the decision.