29 April 2014
PaRR publishes commentary by Anna Numerova

Holcim/Lafarge to see smooth merger review in Russia - lawyers

The proposed tie-up between Holcim and Lafarge is unlikely to face competition hurdles in Russia. The country’s competition authority, the Federal Antimonopoly Service (FAS), is expected to assess the deal’s impact on regional cement markets, in which the two European companies' presence is largely complementary, said two Moscow-based lawyers.

Holcim and Lafarge announced their intention to combine the two companies through a merger of equals on 7 April. The deal will create the world’s largest cement company, as previously reported by PaRR. 

Based on how FAS previously reviewed transactions in the cement sector, the authority is likely to assess the effects of the Holcim/Lafarge combination on the market in federal regions rather than Russia as a whole, said Anna Numerova, counsel at Egorov Puginsky Afanasiev & Partners’s competition practice.

FAS reviews transactions between cement suppliers on a regional basis, the regulator’s spokesperson confirmed to PaRR. There are nine federal regions in Russia, said the spokesperson, adding that in cement deal probes, FAS looks at Far East region and Novosibirsk region, while the remaining regions are considered together. 

FAS is unlikely to split cement into separate product markets, said a Moscow-based competition lawyer.

Holcim and Lafarge do not have plants in the Far East and Novosibirsk regions, according to Holcim and Lafarge's websites.

Holcim supplies 7% of cement in the Central region and 15% in the Volga region, said Denis Pokrovsky, an analyst at Financial Consulting Group. Lafarge’s cement market share in the Ural region is 25%, while its current 11% share in the Central region may climb to 25% once the company’s Ferzikovo facility becomes operational.

FAS will consider the parties’ presence in these regions together with the Southern, Northwestern and North Caucasian federal regions.

In Russia, Lafarge cements plants are in Voskresensl (Moscow region), Korkino (Chelyabinsk region) and soonto-be operational Ferzikovo (Kaluga region), whilst Holcim has two businesses in Kolomna (Moscow region) and Volsky (Saratovsky region).

Holcim and Lafarge in Russia account for 6% and 4% of overall cement supply, said Pokrovsky.

Deals with overlaps under a 35% market share will usually escape close FAS scrutiny, commented the competition lawyer.

Generally, FAS may block a deal if a combined market share of a transaction exceeds 50%, said Numerova.

by Natalia Lapotko in London


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Anna Numerova

Anna Numerova