By Jeffrey May, J.D.
One week after receiving FTC approval for its acquisition of leading U.S. cement manufacturer Ash Grove Cement Company, building material business CRH plc has received the go ahead from the Department of Justice Antitrust Division to acquire quarry operator Pounding Mill Quarry Corporation. The Department of Justice announced today that it will require CRH plc and CRH Americas Materials, Inc. to divest an aggregate quarry in Rocky Gap, Virginia, in order to proceed with its proposed acquisition of Pounding Mill (U.S. v. CRH plc, Case No. 1:18-cv-01473).
According to the Justice Department’s complaint filed today in the federal district court in Washington, D.C., both CRH and Pounding Mill produce and sell aggregate. CRH also produces and sells asphalt concrete. Aggregate is an essential input in asphalt concrete. Aggregate and asphalt concrete are the primary materials used to build, pave, and repair roads. For a significant number of customers in southern West Virginia, CRH and Pounding Mill are two of only three competitive sources of aggregate qualified by the West Virginia Department of Transportation, the government alleged.
Vertical issues. The proposed transaction apparently raises vertical competition concerns, as well as horizontal issues. A recent entrant, which competes with CRH to supply asphalt concrete in southern West Virginia, relies on Pounding Mill to supply the aggregate it needs to manufacture asphalt concrete. According to the complaint, if CRH were to acquire its rival’s source of aggregate, it would have the incentive and ability to disadvantage its rival by withholding this essential input or supplying it on less favorable terms, resulting in higher prices for the sale of asphalt concrete in southern West Virginia.
Settlement. At the same time that the government filed the complaint, it filed a proposed consent decree that is intended to resolve the government’s antitrust concerns. Under the terms of the proposed consent decree, CRH would be required divest the Pounding Mill quarry in Rocky Gap, Virginia and related assets to an acquirer approved by the United States. The structural divestiture remedies the competitive harm resulting from the elimination of a significant aggregate competitor and provides an alternative source of aggregate for CRH’s only asphalt concrete competitor.
Attorneys: Christine A. Hill for Department of Justice Antitrust Division. John Fornaciari (Baker & Hostetler LLP) for CRH plc. Johnathan Gowdy (Morrison & Foerster LLP) for Pounding Mill Quarry Corp.
Companies: CRH plc; Pounding Mill Quarry Corp.
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