Sources: U.S. Federal Trade Commission; CP staff
The Federal Trade Commission is preparing for a November 2021 administrative trial aimed at blocking or altering the terms of Lehigh Cement Co. LLC’s purchase of Keystone Cement, arguing that the $151 million deal will harm regional competition and violate the FTC and Clayton Acts.
The agency cites the suitor’s ownership of two Lehigh Valley area plants—Evansville and Nazareth, with combined annual production capacity north of 3 million tons—within 40 miles of Keystone’s 1.2 million ton/year operation in Bath, Pa. FTC officials see that plant positioning Lehigh Cement with more than 50 percent of powder shipments in 36 eastern Pennsylvania and 12 western New Jersey counties. They define the “relevant market” central to any FTC complaint alleging anticompetitive effects from mergers and acquisitions.
The FTC outlines concerns in a May 20 complaint naming Lehigh Cement, plus parent and ultimate parent companies Lehigh Hanson Inc. and HeidelbergCement AG, along with Keystone Cement, and Giant Cement Holding Inc., a subsidiary of Mexico-based Elementia S.A.B. de C.V. According to the document, Lehigh and Keystone are close competitors for many cement customers, and the latter’s aggressive pricing has caused the former to lower its prices and compete more vigorously in the relevant market.
“Neither new entry nor expansion by other market participants is likely to prevent the acquisition’s anticompetitive effects. No new plants or terminals have been constructed in eastern Pennsylvania or western New Jersey in over 30 years,” FTC suggests in its administrative action announcement. “There are also significant barriers that would make new entry slow and difficult, such as substantial sunk costs, environmental and regulatory requirements, economies of scale, and industry expertise.”