Statement of the Federal Trade Commission

In the Matter of Holcim Ltd. And Lafarge S.A.

FTC File No. 141-0129

May 8, 2015

The Federal Trade Commission has voted to accept a settlement to resolve the likely 

anticompetitive effects of Holcim Ltd.’s (“Holcim”) proposed $25 billion acquisition of Lafarge 

S.A. (“Lafarge”). We have reason to believe that, absent a remedy, the proposed acquisition is 

likely to substantially reduce competition in the manufacture and sale of portland cement and 

slag cement. As we explain below, we believe the proposed remedy, tailored to counteract the 

likely anticompetitive effects of the proposed acquisition without eliminating any efficiencies 

that might arise from the combination of the two companies, is in the public interest.

1

Holcim is a Switzerland-based, vertically integrated global building materials company, 

with products that include cement, clinker, concrete, lime, and aggregates. Lafarge is a Francebased, vertically integrated global building materials company that primarily produces and sells 

cement, aggregates, and ready-mix concrete. 

The merged company will be the world’s largest cement manufacturer, with combined 

2014 revenues of approximately $35 billion and operations in more than 90 countries. Our 

competitive concerns pertain to specific geographic markets in the United States where Holcim 

and Lafarge each make significant cement sales. The proposed merger would likely harm 

competition for the distribution and sale of portland cement, an essential ingredient in making 

concrete, in 12 local or regional markets. It would also threaten to lessen competition for the 

distribution and sale of slag cement, a specialty cement product used in certain applications, in 

two other regional markets.

The merger would create a merger to monopoly in some of the challenged relevant 

markets, while in others at most three competitors would remain post-merger. Absent a remedy, 

the Herfindahl-Hirschman Index (“HHI”) in each of these markets would exceed 3,400, making 

every market highly concentrated according to the 2010 Horizontal Merger Guidelines.2

 The 

increase in HHI in each market would exceed 900, well above the 200-point change necessary to 

trigger the Guidelines’ presumption that the merger is “likely to enhance market power.”3

 There 

is no evidence rebutting this presumption. If anything, the evidence suggests that the estimates 

of market concentration understate our concerns.

In each of the relevant markets at issue, there is evidence that unilateral anticompetitive 

effects are likely. Substantial evidence demonstrates that, for many customers in the relevant 

areas, the merging firms are their preferred suppliers and that customers have benefitted from 

 1 Chairwoman Ramirez, Commissioner Brill, Commissioner Ohlhausen, and Commissioner McSweeny join in this 

statement.

2 See 2010 HORIZONTAL MERGER GUIDELINES § 5.3. The threshold at which a market is considered “highly 

concentrated” under the Guidelines is 2,500.

3 Id.
2

substantial head-to-head competition between the parties in negotiating prices for portland and 

slag cement. Customers in every single one of the affected markets expressed concern that their 

inability to play the merging parties off each other would diminish their ability to obtain better 

prices or other favorable terms. As the Guidelines note, a combination of two competing sellers 

“can significantly enhance the ability and incentive of the merged entity to obtain a result more 

favorable to it, and less favorable to the buyer, than the merging firms would have offered 

separately absent the merger.”4

 In addition, the evidence demonstrates that not all of the 

remaining suppliers in the relevant markets provide customers with practical alternatives to the 

merging parties for a variety of reasons, including capacity constraints, lack of distribution assets 

to supply new customers, and downstream vertical integration.

5

The evidence also suggests that the proposed acquisition would increase the ability and 

incentives of the combined firm and other market participants to engage in coordinated behavior 

that would result in harm to consumers. The relevant markets have characteristics that make 

them susceptible to coordination. They are highly concentrated; the products are homogeneous;

overall market elasticity is low; customer switching costs are low; and sales are relatively small, 

frequent, and usually not made pursuant to long-term contracts. There is also a high degree of 

transparency in these markets. Competitors are aware of each other’s production capacities, 

costs, sales volumes, prices, and customers. Our concern about the potential for coordinated 

effects in these markets is heightened by evidence that cement suppliers, including the same 

global firms that compete in these markets, have expressly colluded in other geographic markets

with similar characteristics.6

 By reducing the number of significant competitors to only two or 

three, the proposed merger would make it easier for the remaining firms to coordinate, monitor 

compliance with, and retaliate against potential deviation from, a coordinated scheme. We 

therefore have reason to believe that the merger may enhance the vulnerability to coordinated 

effects that already exists in the relevant markets.

7

In his dissent, Commissioner Wright takes issue with our decision to seek a remedy in six 

markets, going to great lengths to argue that we are improperly relying solely on the increase in 

market concentration to justify our action, that we are creating new presumptions of harm, that 

 4 Id. § 6.2. 5 For instance, ready-mix concrete producers are often unwilling to purchase cement from their rivals. 6 See, e.g., Press Release, European Commission, The Court of Justice Upholds in Substance the Judgment 

Delivered by the Court of First Instance in 2000 Concerning the Cement Cartel, Jan. 7, 2004, available at 

http://europa.eu/rapid/press-release_CJE-04-2_en.htm (announcing fines of EUR 100 million on cement suppliers 

for collusion); Press Release, German Federal Cartel Office, Highest fine in Bundeskartellamt History is Final, April 

10, 2013, available at 

http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2013/10_04_2013_BGHZement.html (announcing fines of EUR 380 million on Lafarge, Holcim, and others for collusion); Philip 

Blenkinsop, Belgian Competition Regulator Fines Cement Groups, Aug. 31, 2013, available at 

http://www.reuters.com/article/2013/08/31/belgium-cement-idUSL6N0GW05U20130831 (reporting EUR 14.7 million 

in fines levied by the Belgian Competition Council on Holcim and others for collusion); Press Release, Polish Office 

of Competition and Consumer Protection, UOKiK Breaks Cement Cartel, Dec. 12, 2013, available at 

https://uokik.gov.pl/news.php?news_id=10754&news_page=1 (announcing decision of Poland’s Court of Competition 

and Consumer Protection to impose fines of PLN 339 million (~$93 million) on cement suppliers for collusion 

involving Lafarge and others); see generally MERGER GUIDELINES § 7.2. 7 See MERGER GUIDELINES § 7.1.
3

we lack a “credible basis” on which to conclude that the merger may enhance the vulnerability of 

the relevant markets to coordination, and that our action is otherwise inconsistent with the 

Guidelines. We respectfully disagree with Commissioner Wright’s various characterizations of 

the Commission’s statement in this matter. The Guidelines make clear that a substantial increase 

in concentration caused by a merger continues to be a significant factor in merger analysis 

because highly concentrated markets with only two or three large firms are more likely to lead to 

anticompetitive outcomes.8 Economic theory and empirical research bear this out.9 As a result, 

we view the evidence in a merger that reduces the number of firms in a relevant market to two or 

three differently from a merger that only reduces the number of firms to six or seven. Where, as 

here, a proposed merger significantly increases concentration in an already highly concentrated 

market, a presumption of competitive harm is justified under both the Guidelines and wellestablished case law.10 

Moreover, despite Commissioner Wright’s assertion to the contrary, our investigation 

went beyond consideration of market concentration and application of the Guidelines 

presumption of competitive harm and, as noted above, produced additional evidence supporting 

our belief that the effect of the proposed acquisition would be to substantially lessen competition 

and harm cement customers in the relevant markets. On coordinated effects, we found numerous 

characteristics of the market making it vulnerable to collusion. It is particularly troubling that 

existing cement suppliers have expressly colluded in other geographic markets with similar 

characteristics. We also examined whether other market factors, such as the possibility of entry 

or expansion, might alleviate our competitive concerns. The evidence demonstrates the presence 

of high barriers to entry for both portland cement and slag cement, including significant capital 

 8 Id. § 2.1.3 (“Mergers that cause a significant increase in concentration and result in highly concentrated markets 

are presumed to be likely to enhance market power, but this presumption can be rebutted by persuasive evidence 

showing that the merger is unlikely to enhance market power.”). See also Carl Shapiro, The 2010 Horizontal 

Merger Guidelines: From Hedgehog to Fox in Forty Years, 77 ANTITRUST L.J. 701, 708 (2010) (explaining that the 

Guidelines’ flexible approach “certainly does not mean that they reject the use of market concentration to predict 

competitive effects, as can be seen in Sections 2.1.3 and 5,” that the Guidelines “recognize that levels and changes in 

market concentration are more probative in some cases than others,” and that “the Agencies place considerable 

weight on HHI measures in cases involving coordinated effects”) (emphasis in original). 9 See, e.g., Steven C. Salop, The Evolution and Vitality of Merger Presumptions: A Decision-Theoretic Approach 11 

(Georgetown Law Faculty Publications and Other Works, Working Paper No. 1304, 2014), available at 

http://scholarship.law.georgetown.edu/facpub/1304 (“[V]arious theories of oligopoly conduct—both static and

dynamic models of firm interaction—are consistent with the view that competition with fewer significant firms on 

average is associated with higher prices.... Accordingly, a horizontal merger reducing the number of rivals from 

four to three, or three to two, would be more likely to raise competitive concerns than one reducing the number from 

ten to nine, ceteris paribus.”); Steffen Huck, et al., Two Are Few and Four Are Many: Number Effects from 

Experimental Oligopolies, 53 J. ECON. BEHAVIOR & ORG. 435, 443 (2004) (testing the frequency of collusive 

outcomes in Cournot oligopolies and finding “clear evidence that there is a qualitative difference between two and 

four or more firms”); Timothy F. Bresnahan & Peter C. Reiss, Entry and Competition in Concentrated Markets, 

99 J. POL. ECON. 977, 1006 (1991) (finding, in a study of tire prices, that “[m]arkets with three or more dealers have 

lower prices than monopolists or duopolists,” and noting that, “while prices level off between three and five dealers, 

they are higher than unconcentrated market prices”).

10 See MERGER GUIDELINES § 2.1.3; Chicago Bridge & Iron Co. v. FTC, 534 F.3d 410, 423 (5th Cir. 2008) 

(“Typically, the Government establishes a prima facie case by showing that the transaction in question will 

significantly increase market concentration, thereby creating a presumption that the transaction is likely to 

substantially lessen competition.”); FTC v. H.J. Heinz Co., 246 F.3d 708, 716 (D.C. Cir. 2001) (merger to duopoly 

creates a rebuttable presumption of anticompetitive harm through direct or tacit coordination).
4

costs and regulatory requirements. Entry sufficient to deter or counteract the likely harm from 

the proposed transaction would thus be neither timely nor likely. 

In the face of our competitive concerns, based on what we had learned about the nature 

and conditions of the relevant markets, the parties proposed divestitures to remedy our concerns 

in each of those markets. The parties did not comply with our Second Requests. While 

continued investigation may have produced more evidentiary support for our complaint, 

including those markets for which Commissioner Wright dissents, we do not think such a course 

would have been justified. We have ample evidence to support our allegations of 

anticompetitive harm and had no reason to burden the parties with the expense and delay of 

further inquiry for the sole purpose of obtaining additional, cumulative evidence. Nor would 

further inquiry have been a good use of Commission resources.

Merger analysis is necessarily predictive. The evidence in this case provides us with

sufficient reason to believe that the proposed acquisition is likely to substantially reduce 

competition, and there is no evidence of countervailing efficiencies that weigh against the 

remedy. We believe that the public interest is best served by remedying the competitive 

concerns as set forth in our proposed consent order.