See the news release that corresponds to this position statement.
March 28, 2024 – Gatineau, QC – On March 26, 2024, the Competition Bureau announced that it has entered into a consent agreement with Béton Provincial Ltée that resolves its concerns related to Béton Provincial’s proposed acquisition of the Québec-based concrete operations of CRH Canada Group Inc. (CRH).
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Background
Pursuant to an asset purchase agreement dated December 19, 2023, Béton Provincial agreed to acquire CRH’s cement and ready-mix concrete (RMC) operations and certain aggregates operations in Québec (CRH Québec). Cement powder is mixed with aggregates (sand, gravel, or crushed stone), water, and other additives to produce concrete.Footnote 1 RMC is concrete manufactured in batches to meet discrete specifications, and is delivered to job sites in mixer trucks.
The Bureau determined that the proposed transaction would likely result in a substantial lessening of competition for the supply of RMC in the Laurentides from the loss of rivalry between CRH Québec’s batch plant in Mont-Tremblant and Béton Provincial’s batch plants in Piedmont and Saint-Jérôme. Timely resolution of the Bureau’s concerns was facilitated by Béton Provincial’s willingness to engage the Bureau on remedy discussions soon after the Bureau identified the specific market of concern.
The consent agreement requires Béton Provincial to divest CRH’s RMC plant in Mont-Tremblant, along with associated operating assets (i.e. mixer trucks), employees and customer contracts. The Bureau is satisfied that Béton Provincial’s commitments under the consent agreement will resolve the competition concerns with the proposed transaction.
The Bureau’s investigation relied on feedback and data from third party stakeholders, as well as documents and data supplied by Béton Provincial and CRH Québec. This statement summarizes the approach taken by the Bureau in its review of the proposed transaction.Footnote 2
Béton Provincial is headquartered in Québec City, and operates concrete production assets (pre-cast concrete plants, RMC batch plants and quarries for aggregates) in Québec, Ontario and New Brunswick.
CRH is a diversified construction and building supply company with operations across Canada, and includes concrete assets CRH purchased from Holcim Ltd. (Holcim) in June 2015 pursuant to a consent agreement entered into between the Bureau and Holcim to resolve competition concerns from Holcim’s acquisition of Lafarge S.A.Footnote 3
Pursuant to a December 19, 2023 asset purchase agreement, Béton Provincial is only acquiring CRH’s cement and RMC assets, and certain aggregates assets, in Québec (CRH Québec). Specifically, CRH Québec includes:
- a cement plant in Joliette, along with two cement terminals in the Greater Montréal Area (GMA);
- two quarries and one sand pit in the GMA; and
- ten RMC batch plants (seven in the GMA, one in Quebec City, one in Lévis, and one in Mont-Tremblant).
Competition Analysis
The Bureau’s review focused on the overlap between Béton Provincial’s and CRH Québec’s respective concrete supply chains in Québec, including overlaps between inputs (cement plants and quarries), as well as RMC batch plants that directly deliver to end customers in the construction industry. CRH Québec is vertically integrated across the entire supply chain (it operates a cement plant, quarries, and RMC batch plants), whereas Béton Provincial does not own any cement plants in Québec, or anywhere in Canada (it is only vertically integrated with respect to aggregate supply to RMC batch plants).
The Bureau assessed possible competitive harm from horizontal concentration along the concrete supply chain. In addition, as the merging firms are both vertically integrated, the Bureau assessed possible harm from greater incentive and ability to vertically foreclose inputs (cement, aggregates) from rival RMC batch plants, post-merger. Factors considered in assessing competitive harm include the extent of vigorous rivalry between the merging firms, the presence of alternative suppliers, and barriers to entry and expansion.
To assess the extent of vigorous rivalry between the merging firms, the Bureau sought feedback from relevant stakeholders (e.g. customers, suppliers and competitors), gathered information on production capacity and volume sales, and identified overlapping trade areas. The Bureau concluded that trade areas are regional, as proximately located suppliers of concrete inputs (cement, aggregates) and RMC benefit from significant transportation cost advantages in deliveries to end customers.
The Bureau concluded that the proposed transaction does not pose serious competition concerns for the supply of cement, aggregates or RMC in either the GMA or Québec City. In its analysis of each trade area overlap within the GMA or Québec City, the Bureau identified a sufficient number of alternative suppliers capable of constraining either a horizontal or vertical exercise of market power.
The Bureau also concluded, however, that the proposed transaction does pose serious competition concerns for the supply of RMC in the Laurentides from the loss of rivalry between CRH Québec’s batch plant in Mont-Tremblant and Béton Provincial’s batch plants in Piedmont and Saint-Jérôme. In this market of concern, the Bureau did not identify a sufficient number of alternative suppliers, and also concluded that entry would not be timely, likely or sufficient given significant capital expenditure requirements and high barriers to securing inputs, especially from vertically integrated incumbents.
Remedy
In order to remedy the Bureau’s concerns, the consent agreement registered with the Competition Tribunal requires Béton Provincial to divest CRH’s RMC plant in Mont-Tremblant, along with associated operating assets (i.e. mixer trucks), employees and customer contracts.
The Bureau is satisfied that the consent agreement will resolve competition concerns in the market for the supply of RMC to customers in the Laurentides.
This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.
However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case by case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.
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