Competition Commission clears Wienerberger takeover of Baggeridge

The Competition Commission has provisionally cleared Austrian brick and tile manufacturer Wienerberger's £89m takeover of Baggeridge Brick.

The Commission concluded that bringing together the third and fourth largest brick manufacturers in the UK is unlikely to lead to a substantial lessening of competition.

Commission deputy chairman Christopher Clarke said: "We found that after the planned acquisition, customers, which include national and regional developers, housebuilders and builders’ merchants, would be able to switch quickly and easily between comparable bricks offered by the three large brick producers, including the merged Wienerberger and Baggeridge. We concluded that the merged company would not be in a position to use its greater size to raise prices or reduce levels of service to its customers.

"In reaching our provisional conclusion, we found no evidence that the UK brick producers had been engaging in parallel behaviour or tacit coordination to keep prices above, or limit production below, competitive levels.

"Similarly, we did not expect there to be scope for coordination after the merger; this is because we thought that given the characteristics of the brick market, it would be difficult for brick producers to identify focal points to coordinate on either price or capacity; that there would be insufficient incentives for them to coordinate on either of these measures; that were they to coordinate, detection by other brick producers of deviation from the coordinated behaviour would be difficult; and that the scope to punish firms which had deviated would be limited and would anyway be outweighed by the incentives not to coordinate.

"We also noted that coordination was likely to be inconsistent with the strategic approach Wienerberger told us it intended to adopt in the UK."

Anyone wishing to comment further on the takeover must do so by 26 April by email to edwin.james@cc.gsi.gov.uk.