Commitments to ACM improve competition in ready-mix concrete sector
Companies in the ready-mix concrete sector will be better able to compete with one another following commitments made by the sector to the Netherlands Authority for Consumers and Markets (ACM). Seven ready-mix concrete firms, which are Mebin B.V., Cementbouw B.V., Dyckerhoff Basal Nederland B.V., Bruil Beton & Mix Groep B.V., Mortelcentrale Cuijk B.V., Rouwmaat Groep, and Agar Holding B.V. have made extensive and far-reaching commitments to ACM regarding structural changes to their companies. As a result, serious risks for unfair competition have been eliminated. ACM had established that the structure of the sector combined with the close ties between the firms and/or their employees could be harmful to competition. In that context, ACM notes that, based on its investigation, it does not have, at present, any evidence establishing a violation by the firms that have made the commitments.
Chris Fonteijn, Chairman of the Board of ACM, explains: “I’m very positive about these commitments. The competitive environment in the ready-mix concrete sector will improve drastically and structurally. We have had thorough discussions with several firms about the risks for unfair competition. In my view, it is good that these firms themselves will now effectively reduce or eliminate these risks. That is good for prices, quality, service and innovation in the ready-mix concrete sector. As a result thereof, the government, businesses and individuals will benefit.”
Fewer ready-mix concrete plants to be jointly used
One of the risks was that competition-sensitive information could be exchanged because of close collaborations between competitor firms. For example, several plants are jointly used and managed by competitors. Such joint use could lead to reduced competition. That is why collaborations between ready-mix concrete firms that have a combined market share of 40 percent or more in a certain region are to cease within three years. Joint operation of these plants will no longer be allowed then.
Another risk is a company carrying out a job with another competitor. The ready-mix concrete firms have committed to do so only if there is no other option. In addition, clients must be notified of such collaborations. Also, as a result of fewer collaborations, fewer executives will have multiple positions at competing firms. Whenever competitors speak with one another in a business context, such contacts must be registered somewhere.
Entry into the market to become easier
It will become easier for others to enter the ready-mix concrete sector. For example, when selling sites, firms will no longer be allowed to set conditions on the future use of those sites. Competitors are thus allowed to buy a site or plant, and use it towards its own production and selling of ready-mix concrete. Furthermore, the ready-mix concrete firms will invest in training and education so that all employees will be aware of and comply with the rules and regulations.
Significant share of the sector is on board
The seven firms that have made the commitments own more than half of all ready-mix concrete plants. The commitments will take immediate effect, and they will be valid for the next 10 years. ACM will check whether the ready-mix concrete firms will stick to their commitments.
Major clients and large-scale users of ready-mix concrete such as the central-government infrastructure agency (Rijkswaterstaat) and the Central Government Real Estate Agency (Rijksvastgoedbedrijf) welcome these commitments. They expect to be able to benefit from the improved competitive environment in the sector.
Ready-mix concrete is an important commodity in the construction industry
Ready-mix concrete is a mixture of gravel, cement, sand, and water that must be delivered to the construction site within a certain amount of time after mixing. The maximum travel time of a concrete mixer is about 90 minutes. Across the Netherlands, there are almost 200 sites with ready-mix concrete plants, which are operated by 35 firms. The total annual production volume of ready-mix concrete depends on the economic situation. The average annual production is 8 million cubic meters. To put that figure into perspective: 2.6 million cubic meters of concrete was used to build the Channel Tunnel.
Decision to improve competition in ready-mix concrete sector (Dutch)