HARRISBURG — Attorney General Dave Sunday announced an action that will protect the public and promote competitive markets, in response to a proposed merger between two of the largest asphalt companies in the Northeast — including in Pennsylvania and New York.
In response to Colas, Inc.’s proposed acquisition of Suit-Kote Corporation, the Office of Attorney General’s Antitrust Section filed a complaint and settlement in federal court to ensure the merger will not create a monopoly and effectively eliminate competition. The settlement is pending court approval.
The companies — previously competitors — produce and sell asphalt products and services in Pennsylvania to governmental entities (including PennDOT and municipalities) and commercial purchasers. The companies also offer pavement preservation services, such as chip sealing, micro-surfacing, milling, and other similar processes that maintain pavements including roads.
The Office of Attorney General’s action prompted the companies to agree to divest four facilities, including one in Bloomsburg, where the companies also agreed to commit $6.5 million to build out that facility with an emulsion mill, storage for asphalt emulsions, and pavement preservation equipment.
“This is a very important action taken by my Antitrust Team that will ensure a fair marketplace is maintained for these products and services,” Attorney General Sunday said. “It will protect critical roadway infrastructure in central and western Pennsylvania and preserve the government funds that pay for it. The Antitrust Team engages in complicated work to make sure transactions between companies do not harm Pennsylvania, its economy, and its consumers.”
The New York State Office of the Attorney General took similar action.
“No one should be forced to pay unfair prices for safe, well-maintained roads,” said New York Attorney General Letitia James. “Protecting competition in this industry will ensure New Yorkers’ tax dollars are spent fairly and asphalt companies will continue to provide high-quality services to our towns and counties.”
The settlement, if approved by the court, will resolve concerns that the transaction, as originally proposed, would likely harm competition, leading to higher prices, lower quality and less favorable terms for asphalt emulsions and pavement preservation services used by PennDOT and Pennsylvania Municipalities.
Colas and Suit-Kote are two of the leading producers of asphalt emulsions and pavement preservation services in the Northeast, including Pennsylvania. They use and sell asphalt emulsions to complete their own projects and sell and distribute these products to external customers. Their proposed transaction would significantly increase concentration in already highly concentrated markets.
Asphalt emulsions are products made from bitumen or liquid asphalt, water and emulsifiers that are generally used in pavement preservation.
In order to resolve the Commonwealth’s concerns with their proposed transaction and preserve competition in the affected markets, Colas and Suit-Kote have agreed to divest four facilities to a qualified buyer: three Suit-Kote facilities in New York (Belmont, Buffalo and Jamestown) and one Colas facility in Pennsylvania (Bloomsburg). They have also agreed to invest up to $6.5 million to build out the Bloomsburg facility with an emulsion mill, adequate storage for asphalt emulsions, and pavement preservation equipment. Additionally, they have agreed to invest up to $3.5 million to build out the Belmont facility with pavement preservation equipment.
Read the filings HERE.
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