Shares in Breedon Aggregates were rocked yesterday after the competition watchdog warned the quarrying firm it could be forced to sell off a parcel of Scottish assets.
The firm – which has its Scottish headquarters at Ethiebeaton in Angus – has been in the spotlight since the Office of Fair Trading called in the Competition Commission (CC) in October to review Breedon’s £34 million acquisition of a string of Scottish quarries and production facilities from Aggregate Industries UK.
The OFT yesterday released the interim findings of the (CC) probe which provisionally found that some customers in three areas of north east Scotland could face higher prices as a result of the coming together of the two companies and a lack of alternative suppliers.
The regulator yesterday indicated that Breedon – which was already the largest supplier of aggregate products in the region – may be forced to sell off its ready mixed (RMX) concrete plant in the Peterhead area and asphalt plants in Aberdeen and Inverness in order to alleviate the concerns raised during the CC investigation.
“The nature of these products means the markets are local – they are expensive to transport and additionally RMX has a short shelf life,” CC deputy chairman Simon Polito, who is chairing the Breedon probe, said.
“So the loss of a competitor in even a relatively small area matters when the cost and proximity of the production site are the most important factors for customers and in a market where most prices are negotiated.
“Both products are also vital for construction projects and road building. We now want to look in detail at what measures will protect the interests of customers.
“This is likely to involve the sale of asphalt and RMX sites in the affected areas.”
Breedon completed the contentious Aggregate Industries deal in April last year, taking control of 11 quarries, four asphalt plants, nine RMX plants and two concrete block factories at 18 separate sites across north Scotland.
The firm yesterday said it had noted the interim findings of the CC and said it remained in discussion with the regulator. The final binding report is to be published by May 5.
“Breedon has 21 days to respond to the provisional findings and will be discussing arrangements for the possible disposals with the Commission, following which it will seek to expedite the sale of such assets as may be required in order to minimise disruption and secure the future of the small number of employees affected.”
The company – which is due to release its interim results for the full year to December 31 – said yesterday it had finished 2013 strongly and was confident of making progress during the current financial year.