“A victory for consumers” is how the Federal Trade Commission described a decision by rival cement manufacturers to abandon a deal that would have seen the CalPortland Company take over the cement plant at Tehachapi, now owned by Martin Marietta Materials, Inc.
In a statement issued Friday, April 28, in response to the announcement that the company has terminated its proposed $350 million acquisition of assets from Martin Marietta Materials — including the Tehachapi plant — FTC Bureau of Competition Director Holly Vedova said the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market.
She said that the deal was “presumptively illegal.”
The deal between the two companies was announced in August 2022, less than a year after Martin Marietta’s acquisition of the plant and other assets of Lehigh Hanson, Inc.’s West Region business for $2.3 billion in cash was finalized on Oct. 1, 2021. By that time, Martin Marietta had already sold off some of the assets acquired from Lehigh Hanson, including a cement plant at Redding. That deal — also with CalPortland — was finalized last July 1.
Former owner Lehigh Hanson, Inc., and its affiliated companies are part of HeidelbergCement Group, one of the largest building materials manufacturers in the world. Lehigh purchased the Tehachapi plant in 1995. Calaveras Cement owned the company from 1989 to 1995. The plant was built by the city of Los Angeles in 1906 and later became Monolith Portland Cement Company. Martin Marietta became the fifth owner of the plant when its deal with Lehigh Hanson was finalized on Oct. 1, 2021.
CalPortland’s Mojave cement plant is about 15 miles southeast of the Tehachapi plant. It is owned by Taiheiyo Cement, a Japanese company.
In a statement Friday, Taiheiyo only said the companies have terminated their previously announced agreement dated Aug. 9, 2022, “as the parties have been unable to timely obtain the necessary approval by the U.S. Federal Trade Commission.”
Vedova said CalPortland’s proposed deal to buy the Tehachapi plant and other assets — the Tehachapi cement plant and two related cement-distribution terminals — was investigated by FTC staff of the Mergers Division and Bureau of Economics along with the California Attorney General’s Office.
She added that the FTC’s investigation “found that the transaction would have eliminated key competition between the parties in the Southern California market, where the parties compete head-to-head to supply cement and are two of only five suppliers.
“If the transaction had consummated,” she said, “CalPortland, already a leading supplier, would have owned half of all cement plants serving the Southern California market. CalPortland would have been well-poised to raise prices unilaterally, and to sustain those price increases, the investigation found. The transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”
Efforts to reach Martin Marietta were not immediately successful.
Claudia Elliott is a freelance journalist and former editor of the Tehachapi News. She lives in Tehachapi and can be reached by email: firstname.lastname@example.org.
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