The competition watchdog, the Competition and Markets Authority (CMA), has raised concerns over the planned purchase by Kingspan of rival foam sandwich panel supplier Building Solutions.
The CMA has finished a phase one investigation into Kingspan’s deal to buy Building Solutions from SIG. Building Solutions sells a range of insulation and specialist construction products through a variety of businesses, including Steadmans, Trimform, Advanced Cladding and United Roofing Products. Meanwhile Kingspan already owns a number of UK businesses specialising in these products, including Joris Ide.
The CMA said Kingspan and Building Solutions are two of only three key suppliers of standard foam sandwich panels in the UK and would only face “serious competition” from one other UK-based supplier – Tata Steel – after the deal.
Competition from suppliers of products from outside the UK is also “very limited”, the CMA has found.
As a result, the watchdog is moving asking Kingspan and Building Solutions to address its concerns or see the deal referred for an in-depth second-phase investigation.
Colin Raftery, CMA senior director said: “Foam sandwich panels are widely used in non-residential buildings across the UK, such as supermarket distribution centres, hospitals and police stations. Sales of foam sandwich panels in the UK amounted to about £200m last year, so they account for an important part of the construction costs faced by businesses and public bodies.
“Kingspan is by far the largest player in this market and this deal would involve it buying up one of its only two meaningful competitors. So, we’re concerned that the deal could damage competition, resulting in higher prices or lower quality products.”
The CMA acknowledged that the construction sector is expected to be heavily impacted by the coronavirus pandemic and see a “considerable slowdown of activity in the near term” but said the two suppliers are expected to remain important competitors in the longer-term.
