Less competition could force brick price-rise

The cost of bricks is likely to rise if the acquisition of Baggeridge Brick by brick giant Wienerberger is approved by the Competition Commission at the end of May, according to rival brick manufacturer Michelmersh.

Commenting at its preliminary results for 2006, Michelmersh chairman Eric Gadsden said: "We believe that if this [acquisition of Baggeridge by Wienerberger] goes through it will have a positive effect on the industry in that brick prices will inevitably go up as a result of reduced competition."

Michelmersh has experienced a tough 2006, with turnover static compared with 2005 and a slump in pre-tax profit from £502,000 in 2005 to £58,000. It blamed the poor figures on its decision to halt production during the winter due to high energy prices - losing £1m-plus in sales - and reduced demand for housebuilding.

But Gadsden said there is cause for optimism, with energy levels now "more comfortable" and the possible Baggeridge takeover meaning "the shape of our industry is poised for change".

Martin Warner, managing director at Michelmersh, said: "The new company will need to raise prices to put back into the business, especially if it invests in new facilities as it has suggested."

But in the proposed acquisition submission Wienerberger and Baggeridge assured the Competition Commission: "This merger will add to the existing competitive pressures at a national level and will not lead to any substantial lessening of competition."

Similarly, both Hanson and Ibstock Brick denied that the potential consolidation in the market will affect its competitive nature.

"If anything, consolidation makes the market more competitive," a Hanson spokesman commented. "It's nonsense to suggest this will give a green light to price rises.

"That said, prices are going up across our product range and will continue to rise in line with the cost of replacement minerals and production costs. We are also continuing to invest in our customer services - one of the few differentiators in this commodity market."

A spokesman for Ibstock said: "Brickwork is just one of many cladding options our customers have. Bricks must remain price-competitive and demonstrate their excellent sustainability credentials if they are to retain their position as the UK's most popular cladding materials."