Concrete Products

AUG 2015

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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Last month's merger forming LafargeHolcim Ltd. expedited transfer of more than $1 billion in cement, concrete and aggregate production and distribution assets in the U.S. and Canada (note page 11). The Federal Trade Commission justified a decision and order on the sale of those prop- erties per Section 7 of the Clayton Act, a century-old law augmenting the Sherman Act of 1890. It prohibits mergers if "in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly," FTC notes. From a pre-merger investigation, four of the five FTC Commissioners deter- mined the combined U.S. operations of Lafarge and Holcim would violate Section 7 in a) 12 Relevant Markets, defined around Holcim (US) and Lafarge North Amer- ica cement plants in Montana and Iowa, plus terminals under both companies from Boston to Minneapolis-St. Paul to New Orleans; and, b) Mid-Atlantic and western Great Lakes regions as served by Holcim (US) Chicago Skyway and Cam- den, N.J., slag cement plants (note page 10). In the cement realm, a Relevant Market can be considered the radius a plant or terminal serves, factoring shipping feasibilities and the census of customers for whom the operator is a primary, secondary or key supplier. In a partial dis- sent, FTC Commissioner Joshua Wright states a compelling case for a more limited order—asset sales in six Relevant Markets plus the two slag cement regions— but no "remedy" in six other Relevant Markets. The latter would perhaps have deprived a) Summit Materials of an opportunity to double its cement production and distribution capacity along the Mississippi River; and, b) Buzzi Unicem USA of additional Mississippi River and Great Lakes market terminals. Lafarge and Holcim exhibited heavy cement plant and terminal overlap as they built U.S. portfolios over more than five decades. The elevated market thresholds certain in a merger were not necessarily sufficient cause for the FTC to order the breadth of now-consummated asset sales. Commissioner Wright dis- cusses two theories from the FTC's 2010 Horizontal Merger Guidelines critical to understanding his position on the agency's Lafarge, Holcim Decision & Order: Unilateral effects. Most apparent in a merger-to-monopoly in a Relevant Market, it suggests a union of two competing sellers prevents buyers from play- ing those sellers off against each other in negotiations. Coordinated effects. Holds that a merger may diminish competition by enabling or encouraging post-merger coordinated interaction among Relevant Market firms. Coordinated interaction involves conduct by multiple firms that is profitable for each only as a result of the accommodating reactions of the others. Commissioner Wright challenges his colleagues' claims of potential coordi- nated effects in the Lafarge, Holcim review, pointing to three Merger Guidelines "conditions that must each be satisfied to support [such a] theory: (1) a signif- icant increase in concentration, leading to a moderately or highly concentrated market, (2) a market vulnerable to coordinated conduct, and (3) a credible basis for concluding a transaction will enhance that vulnerability." While conceding the first two, he asserts the Lafarge, Holcim investigation "failed to uncover any evidence to suggest the proposed transaction will increase post-merger incen- tives to coordinate … no record evidence to provide a credible basis to conclude the merger alters the competitive dynamic in any Relevant Market in a manner that enhances its vulnerability to coordinated conduct." Commissioner Wright recognizes cement as a complicated business, where a merging of players like Lafarge and Holcim cannot be judged solely on scale for any one market. The FTC will have an opportunity to learn more about cement production, distribution, sales and market concentration in a potential review of the proposed merger between HeidelbergCement AG and Italcementi S.p.A., parent companies of Lehigh Hanson Inc. and Essroc Cement Corp. (note page 10). EDITORIAL BY DON MARSH MINING MEDIA INTERNATIONAL EDITORIAL OFFICE 11655 Central Parkway, Suite 306 Jacksonville, Florida 32224 U.S.A. P: +1.904.721.2925 F: +1.904.721.2930 EDITOR Don Marsh, dmarsh@mining-media.com ASSOCIATE EDITOR Josephine Smith, jsmith@mining-media.com GRAPHIC DESIGNER Michael Florman, mflorman@mining-media.com EDITORIAL DIRECTOR Steve Fiscor, sfiscor@mining-media.com MINING MEDIA INTERNATIONAL CORPORATE OFFICE 8751 East Hampden Avenue, Suite B-1 Denver, Colorado 80231 U.S.A. P: +1.303.283.0640 F: +1.303.283.0641 PRESIDENT/PUBLISHER Peter Johnson, pjohnson@mining-media.com VP-SALES & MARKETING John Bold, jbold@mining-media.com U.S., CANADA SALES Bill Green, bgreen@mining-media.com GERMAN SALES Gerd Strasman, strasmannmedia@t-online.de LATIN AMERICA SALES Paulina Downey, paulina@downeyassociates.cl LATIN AMERICA SALES Sylvia Palma, sylvia@downeyassociates.cl SHOW MANAGER Tanna Holzer, tholzer@mining-media.com PRODUCTION MANAGER Dan Fitts, dfitts@mining-media.com Concrete Products, Volume 118, Issue 8, (ISSN 0010-5368, USPS 128-180) is published monthly by Mining Media Inc., 10 Sedgwick Drive, Englewood, Colorado 80113 (mining-media.com). Periodicals postage paid at Englewood Colorado, and additional mailing offices. Canada Post Publications Mail Agreement No. 40845540. Canada return address: Station A, PO Box 54, Windsor ON N9A 6J5, Email: cir- culation@mining-media.com. Current and back issues and additional resources, including subscription request forms and an editorial calander, are available online at www.concreteproducts.com. SUBSCRIPTION RATES: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: USA and Canada, 1 year $72.00, 2 year $119.00, 3 year $161.00. For subscriber services or to order single copies, write to Concrete Products, 8751 East Hampden, Suite B1, Denver, Colorado 80231 USA; call +1.303.283.0640 (USA) or visit www. mining-media.com ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of selected archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and ProQuest. For microform availability, contact ProQuest at 800-521-0600 or +1.734-761-4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to Concrete Products, P.O. Box 1337, Skokie, IL 60076. REPRINTS: Mining Media Inc, 8751 East Hampden Avenue, Suite B1, Denver, CO 80231 USA; P: +1.303.283.0640, F: 1+303.283.0641, www.mining-media.com. PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clearance Center (CCC) at +1.978.750.8400. To obtain further information, visit www.copyright.com COPYRIGHT 2015: Concrete Products ALL RIGHTS RESERVED 4 • August 2015 www.concreteproducts.com dmarsh@mining-media.com Teachable moments, cautionary tales from FTC Lafarge, Holcim review file

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