Kingspan Merger Raises Competition Concerns says CMA

KINGSPAN’S ANTICIPATED PURCHASE of SIG-owned, Building Solutions, raises competition concerns in the supply of specialist insulation panels, the Competitions and Market Authority (CMA) has found.

Kingspan manufactures foam insulation panels, which are commonly used as insulated cladding on commercial and industrial buildings. Kingspan already owns a number of businesses that supply these products in the UK, including Joris Ide (formerly Category Cladding). Building Solutions also sells a range of insulation and specialist construction products through a number of businesses, including Steadmans, Trimform, Advanced Cladding and United Roofing Products.

The CMA, which began its investigation in February 2020, has found that Kingspan and Building Solutions are two of only three suppliers of foam insulation panels in the UK.

CMA says the companies would only face serious competition from one other, UK-based supplier – Tata Steel – after the deal. Competition from suppliers of products imported from outside the UK and suppliers of other products sometimes used as insulated cladding is also very limited.

Few alternatives to Kingspan

The CMA’s Phase 1 investigation found that the deal could leave the merging companies’ customers, typically building contractors, with few alternative suppliers to choose from.

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 £200 million 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.

“While the CMA is conscious that the construction sector is expected to be heavily impacted by the Coronavirus (COVID-19) pandemic and see a considerable slowdown of activity in the near term, these two suppliers are expected to remain important competitors in the longer-term.”

Kingspan and Building Solutions now has an opportunity to respond to the CMA’s concerns within five working days. If they are unable to do so, the deal will be referred for an in-depth Phase 2 investigation.

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