European Commission blocks HeidelbergCement and Schwenks proposed takeover of Cemex Croatia
The European Commission has blocked the proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk under the European Union (EU) Merger Regulation. The commission expressed concerns that the takeover would have significantly reduced competition in grey cement markets and increased prices in Croatia. The decision follows an investigation by the commission into the proposed deal where HeidelbergCement and Schwenk, two German cement companies, would acquire Cemex assets in Croatia via their joint-venture company Duna Dráva Cement (DDC).
«We had clear evidence that this takeover would have led to price increases in Croatia, which could have adversely affected the construction sector. HeidelbergCement and Schwenk failed to offer appropriate remedies to address these concerns. Therefore, the Commission has decided to prohibit the takeover to protect competitive markets for Croatian customers and businesses,» said Commissioner Margrethe Vestager.
The commission found that the takeover would have eliminated competition between companies that were competing directly for the business of Croatian cement customers and could have led to a dominant position in the markets. The combined market shares of the parties would have been around 45 — 50% in the markets and reached more than 70% in parts of the country, notably in Dalmatia. It found that DDC had been pursuing a strategy to increase sales in Croatia, resulting in more competitive prices for Croatian customers in recent years. Allowing the takeover would have reduced this competition. The commission also found that the remaining domestic cement suppliers and importers would not have been able to compete effectively with the new entity due to limited potential for sales expansion and due to being further from potential markets. In addition there are no independent terminals available on the Croatian coast for seaborne imports.
None of the proposed remedies offered by HeidelbergCement and Schwenk satisfied the commission. Options such as a granting access to a cement terminal leased by Cemex Croatia on the Neretva river in Metkovic in southern Croatia were deemed insufficient and temporary.
Cemex Croatia, the largest cement producer in the country, operates three cement plants, seven concrete plants, two aggregates quarries and a network of maritime and land-based terminals in Croatia, Bosnia-Herzegovina and Montenegro. DDC and HeidelbergCement are the largest cement importers in Croatia.
Cemex Croatia operates three cement plants, seven concrete plants, two aggregates quarries and a network of maritime and land-based terminals in Croatia, Bosnia-Herzegovina and Montenegro. DDC imports grey cement into Croatia from its plants in Hungary and Bosnia-Herzegovina, the closest competing plant to Cemex plants in Split. HeidelbergCement imports grey cement into Croatia from a plant in Italy.
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Michael Weingaertler, construction market expert, Austrian Institute of Economic Research (WIFO), Austria
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