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(Adds European Commission and HeidelbergCement decline comment, no one responded at Cemex Croatia)
By Foo Yun Chee
BRUSSELS, March 28 A joint bid by German cement producers HeidelbergCement and Schwenk for Cemex's Croatian business faces a European Union veto, two sources said on Tuesday.
The European Commission, which opened an investigation into the deal in October, has not been convinced so far by their offer to lease a terminal on the Dalmatian coast to a rival to address its concerns, the sources said.
There is still a chance that European Competition Commissioner Margrethe Vestager may be convinced by the concession, the people said. She told lawmakers last week that it was important for companies to have access to affordable prices in Croatia.
But if the deal is vetoed, it would be third for Vestager after she scuppered CK Hutchison Holdings' bid to buy Telefonica's O2 UK last year. She is due to reject on Wednesday the proposed merger of Deutsche Boerse and the London Stock Exchange.
The EU competition authority has said the Cemex Croatia deal may eliminate a significant player in a concentrated regional market, boost Cemex Croatia's market power in southern Croatia and lead to price hikes in grey cement.
HeidelbergCement and Schwenk want to buy Cemex Croatia from Mexico's Cemex through their Hungarian joint venture Duna Drava Cement (DDC) in a deal worth about 250 million euros. DDC is the largest importer in the region and Cemex Croatia its biggest producer.
The Commission, which is scheduled to decide on the merger by April 18, and HeidelbergCement declined to comment. Cemex Croatia did not respond to requests for comment.
In December HeidelbergCement and Schwenk challenged the Commission's decision to review the case rather than leaving it to the Croatian competition agency. It will take months before a lower court in Luxembourg hears the cases. (Additional reporting by Georgina Prodhan in Frankfurt and Igor Ilic in Zagreb; editing by Alexander Smith)