Breedon Aggregates will have to sell some of its ready-mix concrete sites in Scotland and England for its £336 million deal for Hope Construction Materials to go ahead.
The producer of materials for the construction of roads, bridges, buildings and infrastructure has a major presence in Tayside and Fife.
It has a dozen sites in the area providing asphalt, concrete and rock, with its Scottish headquarters at Ethiebeaton Quarry north of Monifieth.
Hope’s Scottish sites are mainly across the central belt.
Breedon and Hope are major competitors in ready-mixed concrete (RMX) and operate more than 200 RMX sites across England, Wales and Scotland.
The Competition and Markets Authority’s (CMA) initial investigation of the proposed merger ruled out any competition concerns over the production and supply of aggregates.
It also had no concerns about the potential for the merged companies to restrict the supply of aggregates or cement to rival suppliers.
The transaction has given rise to competition concerns over 27 of the 200 RMX sites where the two companies compete as suppliers of ready-mixed concrete.
In these areas local customers might face higher prices as a result of the merger.
The CMA ordered an in-depth phase two investigation unless Breedon offers undertakings to address the competition concerns.
Leicestershire-based Breedon noted the CMA’s announcement that there is a realistic prospect of a substantial lessening of competition in a limited number of local ready-mixed concrete markets.
Breedon said it expected that outcome, and the company now has a short period to address the CMA’s outstanding concerns.
“Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later this summer in line with previous guidance,” the company added.
It is thought Breedon will have to dispose of between 12 and 15 RMX sites to satisfy the CMA. A company spokesman said: “We are not yet in a position to discuss the specific locations involved.”
Sheldon Mills, CMA senior director of mergers, said: “The vast majority of the merger raises no concerns.”
Breedon Aggregates is the largest independent aggregates business in the UK with 140 sites and employing approximately 1,200 people.
Hope has more than 170 sites and 900 employees.