German officials are in a dispute with the European Commission over which competition authority should have jurisdiction over the planned acquisition of one building materials firm by another.

The European Commission this week rejected a request from Germany to refer the matter to its national competition authority, according to information released by the European Commission. At issue is the planned acquisition of Cemex West, a group of subsidiaries of Mexican-based Cemex Group, by Swiss-based Holcim, which supplies cement, ready-mix concrete, and other materials to customers around the world. Cemex West, which also supplies cement and other building materials, has assets in North Rhine-Westphalia, Rhineland-Palatinate, and Saarland in Germany, as well as in France and the Netherlands close to the German border.

With most of the business located in western Germany, German authorities sought to handle the matter themselves, submitting a formal referral request to the commission. Under European Union law, the commission automatically has the exclusive authority to review mergers above certain turnover levels. However, the commission is permitted to refer all or part of the review to a member state if competitive repercussions are national in scope or within a country's borders.

German regulators argued that the transaction would affect competition in the cement market in northern and western Germany significantly, and that those markets contained within German borders met the criteria set forth in the EU merger regulation, according to the commission.

The commission said in announcing its decision that after “an extensive investigation,” it concluded the competitive effects would be broader in scope and extend beyond Germany's borders. The commission said the cement markets affected by the proposed acquisition would include those in Belgium, the Netherlands, and northeastern France. The commission also based its decision on significant levels of cross-border trade in the cement market and its own review of the state of competition within the sector.

The assessment of the proposed acquisition will stay with the commission, which will continue with the in-depth investigation of the transaction begun in October of last year. According to the commission, most mergers are approved after a routine review after being found not to pose problems with competition. There are currently three other in-depth investigations going on – the proposed combination of Swiss-based INEOS and Belgium-based Solvay into a joint venture; Hutchison 3G UK's proposed acquisition of Telefonica Ireland; and Telefonica Deutschland's proposed acquisition of E-Plus in Germany.

In the Cemex West-Holcim deal, the commission has a 31 March deadline to make a decision.

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