Lafarge-Tarmac merger in doubt

Plans for a £3bn merger of cement-maker Lafarge with Anglo American's building materials group Tarmac were up in the air yesterday, after the Competition Commission warned it had a "number of concerns" about the deal.

The regulator said that the merger could "damage competition in certain markets for construction materials", particularly those used to build roads, railways and property.

It pointed out the cement industry already had only four UK producers, and "the market is not as competitive as it could be. Prices and profit margins haven't been affected in the way we would have expected after the big falls in the demand for cement in the past few years".

The joint venture between Tarmac, which FTSE 100 miner Anglo American bought in 1999, and Lafarge of France was first announced in February last year, before being referred to competition regulators by the Office of Fair Trading in September.

If the deal were to get the go-ahead, it would create a building materials behemoth ,with 7,300 employees and revenues of nearly £2bn a year.

Yesterday, the commission said it was looking at possible remedies to the merger's competition issues and would invite responses to its findings next month.