SCR SIBELCO SA/FIFE SILICA SANDS LTD AND FIFE RESOURCES LTD

STATEMENT OF ISSUES

The Competition Commission (the Commission) has sent an issues letter to the main party, SCR Sibelco SA (Sibelco) in its inquiry into the acquisition of Fife Silica Sands Ltd and Fife Resources Ltd (Fife) by Sibelco.

The Commission has identified a number of issues that it wishes to consider, arising from the information received from the main and third parties. These issues form the basis for the Commission’s findings on the question whether the acquisition of Fife by Sibelco might be expected to operate against the public interest.

An issues letter is always sent to main parties before the Commission has reached any conclusions and is designed to highlight those matters which have been identified by the investigating group for further consideration, and to ensure that nothing has been missed. The purpose of making the statement of issues public is to inform all interested parties, should there be any further points they wish to raise with the Commission within the next week. No conclusions have yet been reached by the Commission about whether any matters operate or might be expected to operate against the public interest.

The issues the Commission intends to consider are as follows:

Whether the relevant economic market (a) is for sand for glass-making or some other product or products; (b) is international, national, regional or local in scope; and (c) should include or exclude "in-house" quarrying of sand by companies vertically integrated in sand quarrying and glass manufacture.
Whether, and if so to what extent, the availability of cullet (recycled glass) in the short- to medium-term is likely to act as a constraint on glass sand prices.
Whether Fife was, or alternatively had ceased to be, an effective competitor to SMC (or other glass sand suppliers) before its acquisition by Sibelco; and whether Sibelco’s acquisition of Fife has, or has not, reduced competition in the supply of glass sand in the UK. In particular, whether, and if so to what extent, prices for glass sand were constrained by competition within the glass sand market prior to the acquisition of Fife by Sibelco.
Whether Sibelco’s acquisition of Fife will enhance its position in the supply of glass sand in the UK to such an extent as to enable it (a) to raise prices to its glass manufacturing customers above what would otherwise be the case; or (b) to engage in predatory pricing behaviour, thereby damaging its remaining competitors in glass sand production.
Whether the acquisition of Fife by Sibelco will enable it to reduce royalty rates to the leaseholders or freehold owners of the land from which the sand is extracted.
Whether, given the recent acquisitions by Sibelco in EU markets (including that of Hepworths in the UK and Arenas Siliceas in Spain), and the resulting enhancement of its already powerful position as a producer of glass sand in continental Europe, the acquisition of Fife has intensified that position to such an extent that competition in the UK glass sand market is likely to be put at risk. Whether, moreover, Sibelco’s powerful position in the EU market is likely to result in an increase in the prices of glass products in the EU, including in the UK.
Whether constraints on the medium- and longer-term supplies of glass sand in the UK are likely to exacerbate any adverse effects of the merger, as access to supplies is concentrated in fewer hands.
Whether Fife was a failing firm before its acquisition by Sibelco and whether it would have gone out of business had it not been acquired by Sibelco. Whether any other sand supplier, or any other company, was likely to have acquired Fife, had Sibelco not done so, and to have been willing and able to run it as a viable business.
Whether any benefits are likely to result from the acquisition of Fife by Sibelco, for example, in terms of employment, the viability of the glass sand industry in the UK, or by making the availability of medium- to long-term supplies of glass sand in the UK more likely than would otherwise have been the case.

This press notice is also available on the Competition Commission web site: www.competition-commission.org.uk/04-01.htm or from the Reference Secretary (Sibelco Inquiry), Room 637, New Court, Carey Street, London WC2A 2JT.

Notes to Editors

This reference was made under the Fair Trading Act 1973 on 9 January 2001(see DTI Press Notice P/2001/18).
Further information can be obtained from the Commission website: www.competition-commission.org.uk
Enquiries should be directed to: Francis Royle, Press Officer Tel: 020 7271 0242