With Conditions, FTC Allows Cemexs Acquisition of RMC

Consent Order Ensures Continued Competition for Ready-Mix Concrete in Tucson, Arizona

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For Release

The Federal Trade Commission today conditionally approved the $5.8 billion acquisition of RMC Group PLC (RMC) by Cemex, S.A. de C.V. (Cemex), subject to a proposed consent order that preserves competition in the highly concentrated ready-mix concrete market in metropolitan Tucson, Arizona. Under the proposed consent order, Cemex is required to divest RMC’s ready-mix concrete assets in the Tucson area to a Commission-approved buyer within six months of signing the consent order. If Cemex does not divest these assets, the FTC may appoint a monitor to oversee the sale.

“Absent the Commission’s order, Cemex’s proposed acquisition of RMC raises significant antitrust concerns in the Tucson area,” said Susan Creighton, Director of the FTC’s Bureau of Competition. “Consumers of ready-mix concrete will no doubt benefit from the protection the order provides.”

Parties to the Transaction


Cemex, headquartered in Monterrey, Mexico, is the third-largest cement company in the world and has major downstream businesses in ready-mix concrete and related products. Its operations in Tucson, Arizona include four ready-mix concrete plants, all of which are supplied internally with concrete aggregates.

A United Kingdom Holding Company with headquarters in London, RMC has subsidiaries doing business in the United States and is the world’s largest supplier of ready-mix concrete, as well as a leading European cement and aggregate producer. RMC has five ready-mix concrete plants in the Tucson area, each of which is supplied internally with locally produced aggregates.

Under an agreement dated September 27, 2004, Cemex agreed to acquire 100 percent of the existing shares of RMC for approximately $5.8 billion.

The FTC’s Complaint

According to the FTC’s complaint, the proposed acquisition would violate Section 5 of the FTC Act and Section 7 of the Clayton Act, as amended, by substantially lessening competition in the metropolitan Tucson, Arizona market for the manufacture and sale of ready-mix concrete. There are no close substitutes for ready-mix cement in its principle uses, which include the construction of building foundations.

The complaint states that there are only three ready-mix concrete manufacturers in the highly concentrated metropolitan Tucson market. If the acquisition were allowed to proceed as proposed, the FTC contends, the market would become even more concentrated, with only two independent suppliers of ready-mix concrete remaining. As a result, the agreement likely would facilitate coordinated anticompetitive conduct between Cemex and its remaining competitor. Accordingly, the FTC contends that the acquisition, as originally proposed, would increase the likelihood that ready-mix concrete buyers in Tucson would be forced to pay higher prices and receive diminished service.

In addition, the FTC believes that entry into the metropolitan Tucson ready-mix concrete market on a level sufficient to deter the likely anticompetitive effects of the proposed transaction is unlikely to occur in a timely manner. Among other reasons, entry into the ready-mix concrete market is difficult due to the limited availability of the raw materials that would be required to sustain new concrete operations at a sufficient scale to attract most customers. No new entry into the Tucson ready-mix concrete market has occurred in more than 10 years.

The Proposed Consent Order

The consent order remedies the alleged anticompetitive effects of the proposed transaction by requiring Cemex to divest RMC’s Tucson-area ready-mix concrete assets to a buyer, at no minimum price, within six months of the date that Cemex signs the order. The buyer of the RMC assets must receive prior Commission approval to ensure that the competitive environment that existed before the divestiture is maintained. If Cemex does not divest the assets within the time required, the order would allow the FTC to appoint a trustee to divest the assets within six months of being appointed. The FTC could extend this time period if necessary. The order also requires Cemex to provide the trustee with all necessary information related to the RMC Tucson business.

Finally, the order contains an Order to Hold Separate and Maintain Assets that requires Cemex to hold separate and maintain the viability of the RMC Tucson business as an independent competitive operation pending its divestiture to a Commission-approved buyer. The Order to Hold Separate also is designed to ensure that no material confidential information is transferred between Cemex and the RMC Tucson business, except as allowed by the order. It also provides that the FTC may appoint a Hold Separate Monitor to oversee Cemex’s compliance with the terms of the order. The FTC has named Stephen J. Roebuck as the Hold Separate Monitor.

The Commission vote to approve the complaint, consent order, and order to hold separate and maintain assets was 4-0-1, with Chairman Deborah Platt Majoras recused. The order will be subject to public comment for 30 days, until March 15, 2005, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, consent order, order to hold separate, and an analysis to aid public comment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC’s Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC. 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published “Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws,” which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

(FTC File No.: 051-0007)

Contact Information

Media Contact:

Mitchell J. Katz
Office of Public Affairs

Staff Contact:
Randall A. Long
Bureau of Competition