The Competition and Markets Authority (CMA) has found that the anticipated purchase of MBCC Group by Sika AG could lead to a loss of competition in the supply of chemical admixtures in the UK.
Chemical admixtures are an essential input for products like concrete and cement used in the construction industry. These specialty chemicals are commonly used to improve the strength of concrete or to control its setting time, to allow wet concrete to be transported over longer distances or held on-site for longer periods.
Chemical admixtures, which have become increasingly important as construction methods have developed, also play a key role in reducing the cost and environmental impact of concrete production.
Sika AG is a Swiss-based multinational specialty chemical company active across the construction sector and motor vehicle industry. MBCC is also a leading global supplier of construction chemicals and solutions.
Sika announced its intention to acquire MBCC, in a deal valued at around £4.5 billion, in November 2021.
Sika and MBCC are the two largest suppliers of chemical admixtures in the UK and compete closely, particularly for customers with large volume requirements . Both companies are also two of the few competitors able to support customer requirements for product development and innovation.
The CMA found that the combined business would account for over half of admixtures supplied in the UK after the merger and face limited competition, giving customers less choice and potentially leaving them facing higher costs and reduced innovation .
Colin Raftery , Senior Director of Mergers at the CMA, said:
“Chemical admixtures are vital to the UK construction industry, used in projects that range from laying pavements to the very largest infrastructure projects.
“The loss of competition that this deal could bring about could lead to higher prices and poorer quality products for customers, increasing the costs of these projects.”
Sika AG and MBCC Group now have to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted, the deal will be referred for an in-depth Phase 2 investigation.