REG - Competition and Mkts - CMA update: Sika / MBCC

Sika AGAnnouncement

27/07/2022 08:15

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RNS Number : 8888T  Competition and Markets Authority  27 July 2022

CMA finds concerns in proposed chemicals merger

The 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 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
Competition and Markets Authority (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 5 working days 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.

Notes to editors

For media enquiries, contact the CMA press office on 020 3738 6460 or
press@cma.gov.uk (mailto:press@cma.gov.uk) .

As part of its investigation, the CMA also considered whether there would be
an SLC in relation to certain products used in drinking water infrastructure
in the UK, and structural cementitious grouts used for offshore wind turbine
installation. In both instances however it found that there would be
sufficient competitive constraints to prevent an SLC.

Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a reference
to Phase 2 if the CMA believes that it is or may be the case that a relevant
merger situation has been created, or arrangements are in progress or
contemplation which, if carried into effect, will result in the creation of a
relevant merger situation; and the creation of that situation has resulted, or
may be expected to result, in a substantial lessening of competition within
any market or markets in the United Kingdom for goods or services.

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