By Jeffrey May, J.D.
The federal district court in Washington, D.C. yesterday approved a U.S. consent decree, requiring building materials business CRH plc to divest an aggregate quarry in Virginia in order to proceed with its acquisition of quarry operator Pounding Mill Quarry Corporation. The consent decree settled Department of Justice Antitrust Division concerns that the combination of CRH and Pounding Mill would have harmed competition by combining two of only three competitive sources of aggregate used to build, pave, and repair roads that are qualified by the West Virginia Department of Transportation (U.S. v. CRH PLC, November 29, 2018, Friedrich, D.).
The government filed the complaint and the proposed consent decree on June 22, 2018. In its complaint, the government identified both horizontal and vertical issues with the transaction. CRH produces and sells both aggregate and asphalt concrete. Aggregate is an essential input in asphalt concrete. With respect to the vertical concerns, the Justice Department explained that a recent market entrant AAA Paving and Sealing, Inc., was the only company that competed with CRH to supply asphalt concrete in Southern West Virginia. Before the acquisition, AAA Paving relied on Pounding Mill to supply the aggregate it needed to manufacture asphalt concrete. The acquisition therefore would have put the quarries that were AAA Paving’s only economically viable sources of aggregate under the ownership of CRH, its competitor in the sale of asphalt concrete. Without the divestiture, CRH could have disadvantaged AAA Paving by withholding this essential input or by supplying it on unfavorable terms. Pursuant to the consent decree, the government approved the sale of Pounding Mill’s Rocky Gap quarry located in Rocky Gap, Virginia, to Salem Stone. The government identified Salem Stone as a strong aggregate competitor in markets near Southern West Virginia. Thus, the divestiture will give AAA Paving an independent aggregate supplier, according to the Justice Department.
West Virginia attorney general’s comment. The settlement was subject to public comment, and only one comment was received. It came from the attorney general of West Virginia. The West Virginia attorney general contended that the proposed settlement would not resolve the U.S. competitive concerns because it did not preserve the ability of AAA Paving to compete in the sale of asphalt concrete. Rocky Gap Quarry is not a viable option for AAA Paving because that quarry is 17 miles away from AAA Paving, according to the state attorney general’s comment.
Justice Department’s response. In its response published in the November 26 Federal Register, the Justice Department reiterated its position that consent decree resolved the concerns raised in its complaint. The divestiture required by the consent decree ensured that CRH’s acquisition of Pounding Mill would not result in less competition or fewer alternatives for AAA Paving or other nearby customers. The Justice Department also noted that the allegations relied upon by the West Virginia attorney general were unsupported and factually incorrect. Therefore, the Justice Department moved for court approval, which was granted.
The case is No. 1:18-cv-10473-DLF.
Attorneys: Christine A. Hill, U.S. Department of Justice, for the United States. John Robert Formicary (Baker & Hostetler LLP) for CRH PLC and CRH Americas Materials, Inc. Jeff A. Jaeckel (Morrison & Foerster LLP) for Pounding Mill Quarry Corp.
Companies: CRH PLC; CRH Americas Materials, Inc.; Pounding Mill Quarry Corp.
MainStory: TopStory Antitrust AcquisitionsMergers AntitrustDivisionNews DistrictofColumbiaNews WestVirginiaNews
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