Bundeskartellamt clears Strabag/Roba merger subject to obligations

The Bundeskartellamt has cleared the acquisition of a majority holding in Ed. Züblin AG, Stuttgart by the construction holding company Strabag SE, Spittal/Drau (Austria) with obligations as far as this involves Züblin’s subsidiary, Roba Baustoff GmbH., Augsburg. The merger had already been notified to the European Commission in August 2005, which cleared it. However, the Commission then referred the case to the Bundeskartellamt since the merger affects various regional markets for asphalt mix in Germany.

The Strabag group is active in the field of civil and structural engineering and road construction, especially in Germany, Austria and eastern Europe. The company plays a leading role in road construction in Germany. Strabag’s activities in the production of building materials have up to now been of secondary importance. Züblin and its subsidiary, Roba, were part of Walter Bau AG, which was the subject of insolvency proceedings in the spring of 2005. Walter Bau was an internationally active construction company specialising in prefabricated construction, engineering and traffic infrastructure construction. Roba is active predominantly in the production and distribution of asphalt mix and ready-mixed concrete.

The Bundeskartellamt had issued a warning letter about the merger because it would have led to the creation or strengthening of dominant positions in the production and distribution of asphalt mix in the market areas of Berlin, Munich and Chemnitz. In view of the close business connections between Strabag and the market leader in the asphalt sector, the Werhahn group, no significant competition to the Werhahn works could be expected following the acquisition of the Roba works by Strabag. Werhahn and Strabag would together have dominated the above regional markets.

In order to avoid a prohibition Strabag offered to sell its 49 per cent shareholding in Deutag GmbH & Co. KG to the Werhahn Group. Werhahn has already concentrated most of its asphalt business in the hands of Deutag. In Germany Deutag operates a network of over 100 asphalt mixing plants. Strabag is also to break up further corporate links with the Werhahn Group, particularly with a joint venture which operates in Saxony. Strabag’s minority interest in the leading asphalt producer in Bavaria, Bayerische Alsphalt-Mischwerke für Straßenbaustoffe GmbH & Co. KG (BAM), will remain unaffected. The Werhahn Group also has a majority holding in BAM. As concerns the Munich market area Strabag has therefore offered to sell the Roba plant to an independent competitor.

Strabag also offered to divest Deutag with a view to acquiring further asphalt-mixing activities, among others, in Hamburg. Moreover, it was only after this divestiture that Strabag became eligible for the acquisition of various plants and participations in Mecklenburg-West Pommerania, Saxony and Saxony-Anhalt which Werhahn had to sell to an independent purchaser to meet the obligations to divest imposed in the merger control proceedings involving Werhahn/Norddeutsche Mischwerke.

The President of the Bundeskartellamt, Ulf Böge, stated: “The divestiture of Deutag will create necessary pro-competitive stimulus. The leading road construction company, Strabag, as the largest buyer of asphalt mix in Germany, will have no financial interest in future in the leading asphalt producer, Deutag, meaning that Deutag’s competitors will also have a chance to win Strabag as a customer. Pro-competitive impulses can also be expected in future from Strabag’s role as a supplier of asphalt mix.”