The cement billionaires

Despite being a relatively mundane product, cement has created some of the richest corporations in the world, not least Ireland’s CRH plcSéamus Maye 


In a simple world, anyone could make cement from limestone and shale, however, in our not so simple world, there is one further magic ingredient in the cement mix – money. The largest public company in the history of the state is CRH plc. Seán Quinn, by far the richest man in Ireland (until recently), also made his money from cement. CRH plc is valued at circa €10 billion.  Seán Quinn was widely reported to be worth just shy of €5 billion before his spectacular fall. The CRH plc story is essentially a tale of how a small group of businessmen hijacked the democratic process, enslaved the body politic, forged massive influence over the banking sector and for decades engaged in an unprecedented campaign of corporate bullying aided and abetted by a captive state.

It started with the Danish-owned Irish Cement which had been in receipt of support from the then state bank ICC from the mid 1930s. According to Frank Casey (former CEO of ICC Bank), in his book ‘Credit Where Credit is Due’ (2000), in around 1950, the Roche brothers needed funds to enable the fledgling Roadstone Limited to expand. The state bank ICC obliged and underwrote a (then) substantial share issue for Roadstone. The share issue hopelessly failed and ICC had to step in and take up 21,050 preference shares and 91,450 ordinary shares. The state was firmly aboard.  According to Casey, ICC bank underwrote four further share issues for Roadstone.

By 1969/1970 Roadstone had become a dominant force in quarrying, concrete and tarmac; and wished to acquire its monopoly cement supplier, Irish Cement. ICC was then advisor to both companies. That Roadstone succeeded probably owed much to the presence of the infamous Des Traynor on the Board of Irish Cement. There was, however, a seemingly insurmountable problem facing the creation of the proposed monolith: the Irish Constitution and in particular Article 45 [2]:

“(ii) That the ownership and control of the material resources of the community may be so distributed amongst private individuals and the various classes as best to subserve the common good.

(iii)  That, especially, the operation of free competition shall not be allowed so to develop as to result in the concentration of the ownership or control of essential commodities in a few individuals to the common detriment.”

This problem was overcome by being ignored. It helped that the former Taoiseach, Seán Lemass, was appointed Chairman of the new Cement Roadstone Holdings and Des Traynor, who engineered the secretive Ansbacher deposits system, was appointed a non-executive director. Later, the company was renamed CRH plc (Cement Roadstone Holdings). CRH plc then acquired effective control of Irish Industrial Explosives, the state’s monopoly manufacturer and supplier of industrial explosives. Life was beginning to get difficult for independent quarry and concrete producers who were forced to buy key raw materials, cement and explosives from their biggest competitor.

This strategy was to prove crucial in the exponential profit growth of the company in succeeding decades. The super-normal profits extracted from the Irish market were the cornerstone of CRH plc’s worldwide expansion that started in the late 1970s with its first foray into the US market.

CRH assiduously set about cementing its links to all of the political parties; Lemass died in 1971 and in 1972 there was an abortive attempt to appoint Charlie Haughey as Chairman.

But how did all the profit come about? Put simply, the Prices Commission, the state agency served with controlling prices and ensuring that consumers were best served turned a blind eye to CRH’s drive to inflate cement prices. CRH went on to turn itself into a vertically- and horizontally-integrated near monopoly, free from government sanction. Being vertically integrated, it controlled all stages of the production process for explosives, cement, aggregates, ready-mix concrete, concrete products, ground limestone, tarmac and superfines for the production of fertiliser and animal feedstuffs. It was also horizontally-integrated since it controlled the majority of the quarries and concrete plants throughout the country.

This level of dominance allowed CRH to control pricing throughout the industry. It set about dramatically increasing the price of products over which it had a monopoly, such as explosives and cement while at the same time suppressing prices of products in markets where there was still competition. In one year alone in the late seventies, it increased cement prices by almost 30 per cent, though prices for quarried rock and concrete products for the most part either didn’t increase at all or dropped. The Prices Commission never asked any questions.

This type of market conduct is described by economists as ‘margin Squeeze’ or ‘predation’. Small independent competitors were faced with paying artificially high prices for inputs while being forced to accept artificially low prices for products. A sustained campaign of margin squeeze weakened the balance sheets of independent producers and eventually drove dozens of companies out of business.

CRH realised that it could not simply acquire one hundred per cent of every market: questions might be asked. The strategy had to be refined to catch some of those independent producers that were going bust.  Des Traynor has often been credited with the next stroke of genius – the secret acquisition of independent downstream competitors. A pattern developed in the late 1970s, whereby CRH plc began secretly to acquire control of quarry/concrete/tarmac producers. The UK’s former Mergers and Monopolies commission describes a secretly-controlled company in this context as a “fighting company”: a company which is a member of a group, but whose ownership is concealed from the public. The fighting company can be used to attack a competitor’s customers by offering them favourable terms and conditions.

There were several advantages to this strategy for CRH plc: it created an illusion of competition between the CRH plc subsidiary and the secretly-controlled undertaking which of course retained its own identity; it acted as an insurance policy for Irish Cement and Irish Industrial Explosives since it removed the threat of the ‘independent’ company buying imported cement or explosives; and because local competition had now been removed in a given local market, it allowed CRH plc to increase prices for its downstream products such as concrete, crushed stone and tarmac.

Meanwhile other competitors were being crushed out of existence, very often with added pressure from banks which CRH plc had begun to influence. CRH plc or one of its secretly-owned subsidiaries would then buy the assets and either close down or integrate the stricken operation.

In the early 1980s, there was a backlash as independent producers tried to make a stand. The Independent Concrete Manufacturers Association (ICMA) was formed ostensibly to stand up to CRH plc.  Some independents such as Pat O’Carroll of Ardfert Quarries in Kerry and Tom Goode of Goode Concrete, Dublin, started to import cement – a serious offence in the eyes of CRH plc. O’Carroll’s Ardfert was relentlessly attacked and brought to its knees.  CRH plc eventually took secret control of Ardfert Quarries through a complex shareholder structure whereby AIB subsidiary Alibank Nominees held 49 per cent of Ardfert in trust for CRH and ICC Bank held the casting two per cent in trust for CRH. The threat of cement imports had receded.

Goode Concrete was also pressurised to sell its cement importation facility at Wicklow Port to CRH. As part of the deal Goode had to shrink his fleet of ready-mix trucks and enter into a market-sharing and price-fixing agreement with CRH and others in the Dublin concrete market. In Cork, CRH forced its competitor Castlemore Quarries to relinquish control to it. The vehicle used here in the early years was Bank of Ireland which held 50 per cent of Castlemore shares on behalf of CRH plc.



eanwhile the ICMA managed to negotiate a paltry loyalty rebate with CRH for its members – £2.50 per tonne of cement. The catch was independents had to purchase only Irish cement.  Loyalty rebates, where their effect is exclusionary or anti-competitive, are illegal. CRH eventually accepted this and withdrew the exclusivity requirement.

However, there was no quick fix for independents. Price wars broke out all over the country with talk of others entering the cement import market to counter CRH‘s aggressive behaviour. Soon, senior members of the ICMA entered into talks with CRH that laid the foundation for the outright cartelisation of virtually all the markets in which CRH plc operated: ready-mix concrete, concrete blocks, crushed stone, ground limestone, tarmac/asphalt, superfines.

Not all independents were secretly taken over. Some were merely cartelised in their own local/regional market. Typically, a local market, of which there were several throughout Ireland, would consist of a CRH subsidiary, Roadstone or John A. Wood “competing” alongside a “fighting company” and an “independent producer” that had been admitted to the cartel and which willingly purchased over-priced raw materials from CRH in return for a market ‘accommodation’ which in turn allowed the ‘independent’ to earn pre-agreed levels of profit.

Where a true independent was still active or entered a local market, prices of stone/concrete/tarmac would collapse until the unwanted competitor was evicted from the market. CRH would in turn subsidise its ground troops to help them win the price wars.

Thus the structures were put in place to afford CRH an extraordinary level of dominance in a host of construction materials markets throughout Ireland. CRH could now extract super–normal or monopoly profits from its Irish operations, albeit at the expense of independent producers, Irish citizens and the exchequer. Dr John Fingleton of the Competition Authority aptly stated that “CRH had used small concrete producers as proxies for the consumer”.

The model and the complicity were twigged from time to time. In the mid-1980s, the Fine Gael-Labour Government introduced the Cement Certification scheme which was instrumental in blocking cement imports from other European countries to Ireland. Under pressure from the European Commission, the Irish Government was eventually forced to adjust the scheme to comply with EU Competition Law.

Despite CRH’s dominance, the state sold its (Sugar Company-owned) ground limestone quarries at Mount Nugent and Barley Hill, in Leinster, to CRH in the early 1980s. The main other threat in the ground limestone (and tarmac) market in Leinster was Stoneford Quarries in Duleek. After a sustained price war, Stoneford fell into CRH hands too. Stoneford was one of dozens of quarries that were forced out of the market by CRH.

CRH also cornered the market for ‘super fines’, a very finely ground limestone used in animal feedstuffs, fertilizer and asphalt, mainly through the hostile acquisition of Castlemore Quarries in Cork and the further acquisitions of Clogrennane Lime and Milverton Quarries.

To this day, CRH’s eviction strategy remains key to protecting its markets in Ireland. Resistance to CRH has always failed whether in the marketplace or for those that sought to challenge CRH’s behaviour through the courts. In the words of a retired CRH executive, “you cannot own a concrete company in Ireland; you can just be a figurehead”.

There is, however, always the renegade exception and Seán Quinn successfully challenged CRH plc when in 1989 he opened his cement plant at Derrylin, Co. Fermanagh. Operating from Northern Ireland, Quinn had built up a strong capital base aided in no small measure by controversial British Government grant schemes that hugely boosted quarry and concrete operators north of the border, at the expense of those operators south of the border. Quinn was now sufficiently robust to build a cement factory and take on the might of CRH. While price-cutting was an effective tool against quarried-rock and concrete producers, cutting cement prices is akin to cutting the jugular vein. Quinn had arrived and CRH had no option but to move over and accommodate the new entrant.


Séamus Maye is Director of Framus Ltd and Founder and Co-ordinator of the International Small Business Alliance