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Lower material prices set in concrete?: CMA imposes conditions on Sika / MBCC merger

January 2023
Paul Henty


The Competition and Markets Authority (CMA) in the UK plays a crucial role in reviewing proposed mergers and acquisitions under the Enterprise Act 2002. This is to ensure that such deals do not result in anti-competitive outcomes that would harm consumers and markets.

The CMA may intervene to block mergers and order merging companies to be held separate pending a full review of the impact that the merger may have on prices and product choice for businesses and consumers.   Where a company has already been purchased, the CMA may even order it to be sold off again with a view to restoring competition in the affected market.

The CMA recently exercised its powers to review a proposed merger between cement suppliers Sika and MBCC. Sika, a Swiss company, agreed to buy Germany’s MBCC, which owns Master Builders Solutions, for £4.5bn in November 2021. Both companies are major players in the chemical admixtures sector, with Sika being the largest supplier of these products in the UK and MBCC owning Master Builders Solutions. Chemical admixtures are used in the process of manufacturing concrete and play a key role in controlling the strength and setting time of the finished product.

CMA’s findings

The CMA initially expressed reservations that the merger of these two companies could lead to reduced competition in the market and therefore potentially higher prices for concrete producers.  Those prices could be passed on to purchasers, such as construction firms.

In response, the firms offered to sell off MBCC’s chemical admixtures business in order to address these concerns.  That was proposed as a remedial concession to lower the merging parties’ share of the market and reduce the stranglehold they may otherwise have.  The CMA has now reviewed and accepted this proposal, stating that it will maintain the level of innovation, services and quality available to concrete producers and prevent the deal from raising prices for the UK construction industry.

This case illustrates that the merger clearance process can sometimes have an impact on the interests of construction companies, who may wish to seek legal representation before the competition authority in order to influence its decision making. In general, the CMA will seek the views of third parties about a proposed merger, providing an opportunity for stakeholders to voice their opinions or remain silent and accept the potential consequences of an anticompetitive merger.

Cementing lower materials prices?

It remains to be seen whether the CMA’s decision in this case will effectively address competition concerns and prevent further rises in prices for concrete.  Consent to the deal will not be given until the CMA has also approved the purchaser of the MBCC businesses, which has yet to be identified or announced.  Anyone reading this note who would be interested in making an approach to purchase the divested businesses should not hang around.  Frequently, the disposal price will be lower because the market knows the merging parties are under pressure to reach a deal quickly.

However, it remains to be seen whether the CMA’s condition will be fulfilled with the merger being allowed to proceed. An acceptable purchaser will still need to be found.  The CMA is likely only to approve an incoming purchaser which is able to run the MBCC businesses as vibrant competitor that helps to maintain a healthy rivalry within the market.   The proposed candidate will also need to be a purchaser without an already sizeable share of the relevant markets, or that could cause fresh consolidation concerns.  If construction or materials companies do not believe the proposed purchaser could run the divested business in a way that sustains competition, they may wish to let the CMA know.


Overall, this case highlights the importance of construction companies being aware of and engaging with the merger clearance process, as it can have significant implications for their business. Seeking legal representation and making their views known to the competition authority may be necessary in order to ensure that the interests of the industry are taken into account and any potential negative impacts are minimised.  In the CMA, stakeholders can expect a receptive audience.  The regulator depends heavily on the input of customers, competitors and suppliers to understand how a corporate acquisition will impact markets and product prices.

This note has looked at the interests of construction companies. Mergers may also impact upon the interests of engineers.  In a forthcoming article, we will look at the CMA’s review of the anticipated acquisition by Hitachi Rail, Ltd of Thales SA’s Ground Transportation Systems Business, a consolidation which may have repercussions for Network Rail and TfL, as well as businesses active in the rail signalling sectors.

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