Latest Views
Our views on the issues affecting your business

Yesterday, the Office of Fair Trading (OFT) announced that it would be launching a market study into the UK aggregates sector. The study will cover the United Kingdom and is expected to be completed by July 2011. The OFT has confirmed that it intends to examine:

• The extent of competition between different aggregates producers and whether increased concentration and integration of operations may affect competition at the local level
• How the planning system, in determining the supply of aggregates at a local and national level, and competitive forces interact and affect services and value for money provided to customers
• Barriers to entry and how these differ depending on whether the competition is for land or marine based aggregates or secondary aggregates.

The OFT has launched the market study as a result of concerns expressed to it during a number of earlier investigations into the possible anti competitive effects flowing from a number of mergers in the sector. Firms active in the aggregates sector can expect to be approached by the OFT with requests for information. The OFT has also encouraged those that do not receive a request for information to make voluntary submissions before 15 October 2010.
 

What is a market study?

A market study allows the OFT to examine the conditions of competition on a market. At the end of its study the OFT can:

• Give the market a clean bill of health;
• Publish information to help consumers;
• Encourage firms to take voluntary action;
• Encourage a code of practice;
• Make recommendations to the Government (for instance, to change the legislative framework governing the sector);
• Investigate and take enforcement action for a breach of competition legislation; or
• Refer the aggregates market to the Competition Commission (CC) for a more detailed examination.

Nicola Kingaby, competition associate says, "aggregates producers and other parties asked by the OFT to provide further information as part of its market study only have a short period within which to respond. For this reason, it is important to give some thought, at an early stage in proceedings, as to how any response is framed. The response could impact on the type and extent of the market study, as well as the choice of remedies should a problem with competition be found. If the OFT considers that a detailed investigation by the CC is required, it is worth noting that the CC is only entitled to investigate the aggregate sector in accordance with the OFT's terms of reference. It is important, that when responding, firms should consider carefully how a market study might impact on their business and to lobby for the terms of reference to be framed in the most advantageous way. For submissions to the OFT to carry weight and to be convincing, it is important that they are fully reasoned, well considered and argued in the context and language of competition law".

For more information, please contact Nicola Kingaby.