State announces settlement in asphalt suit
CHARLESTON — A lawsuit accusing several paving companies of anti-competitive practices and price gouging is over.
State officials announced Friday that West Virginia Paving Inc., Kelly Paving Inc., American Asphalt and Aggregate Inc., and eight associated companies agreed to pay the state $101.35 million in a settlement of an antitrust case brought by Attorney General Patrick Morrisey and six local governments.
Morrisey and Gov. Jim Justice held a virtual press conference Friday from the State Capitol Building, joined by Department of Transportation Secretary Byrd White.
“This has been in the works for a long time,” Justice said. “Today is an incredible announcement for West Virginia. The magnitude is off the chart … we have reached the largest antitrust settlement in West Virginia.”
“This has been an incredible effort by so many people in order to reach the single largest antitrust settlement in state history,” Morrisey agreed.
The lawsuit, filed on Jan. 11, 2017, accused CRH plc — based in Ireland and the parent company for several asphalt and paving companies doing business in West Virginia — of creating a monopoly on paving and asphalt supplies, driving up the cost of projects and materials at the expense of state taxpayers.
“About four years ago, I stood in front of the Capitol and we outlined how a group of asphalt, paving, and contracting companies had conspired to constrain trade and develop a monopoly over the asphalt markets in parts of the state,” Morrisey said.
“We spent an enormous amount of time over those last few years doing discovery, engaged in litigation, negotiation, and now we were able to achieve something truly incredible.”
According to the terms of the settlement, West Virginia Kelly Paving and American Asphalt will pay the state $30.4 million in an upfront payment, as well a combined share of $4.4 million for Beckley, Bluefield, Charleston, Huntington, Parkersburg, and Kanawha County. West Virginia Paving is also required to provide $71 million in credits that can be applied to already completed road projects, current projects, and future projects.
“We’ve spent lots and lots of hours on this, all to the benefit of the people of West Virginia,” White said. “The settlement purely comes to the people of West Virginia and we’ll use it to pave roads, fix roads, help with our other maintenance projects that we’ve got in the state.”
The companies agreed to non-monetary requirements and restrictions, including eliminating non-compete clauses and 120-day notice to state of any future company acquisitions that exceed $500,000 in nine counties in Southern West Virginia. A similar requirement states that West Virginia Paving and CRH must give notice of any acquisition exceeding $1 million in 16 counties — from the Mid-Ohio Valley down to the Ohio River to Cabell County to the Charleston metro area.
Lastly, Camden Materials LLC — a joint venture between Kelly Paving and West Virginia Paving — is subject to price restrictions for the next seven years unless an outside company takes over Camden Materials.
While the monetary part of the settlement will be helpful to the state and local governments involved in the lawsuit, Morrisey said the whole settlement will be helpful in the future by allowing new companies to come into the state and compete, greater transparency of pricing, and transparency for when these companies attempt to purchase competitors.
“We made it clear that we were not just in this for money for dollars for the state,” Morrisey said. “We had to see real structural changes to advance competition. I’m very hopeful we’ll see new market entrants and I’ll be out there talking about these settlement terms so that we can lure more people in.”
According to Morrisey, West Virginia Paving, Kelly Paving, and American Asphalt all denied wrongdoing as part of the settlement. The settlement was negotiated on behalf of the Attorney General by an outside law firm, Bailey and Glasser, along with Robinson and McElwee and the Webb Law Centre.
In a statement, West Virginia Paving said they were pleased to have the lawsuit settled and behind them.
“(West Virginia Paving) is of the firm view that it has always acted lawfully and has not been found to have been in breach of any West Virginia laws,” according to the statement. “All parties believe that a mediated settlement is the most pragmatic solution to their differences. WVP has a long and successful history of doing business with (the Department of Transportation) and will continue to do so going forward. This agreed settlement allows both parties to move ahead, avoids the uncertainty of a protracted legal process and allows WVP to continue servicing its customers.”
Other defendants in the lawsuit were Oldcastle Inc., Oldcastle Materials Inc., Southern West Virginia Paving Inc., Southern West Virginia Asphalt Inc., American Asphalt of West Virginia LLC and Blacktop Industries & Equipment Company.
Justice, heading off any criticism about the timing of the settlement so close to the general election, said officials had hoped to have the settlement finalized over the last two months and that the timing was coincidental. Justice has made numerous economic development announcements and grant presentations over the last several weeks.
“There’s going to be the stone-throwers sitting out there saying ‘why are you announcing this right before an election,’ and everything. There is only one reason: we finally got it done,” Justice said. “For any naysayer that would say we’re bringing this up at election time and it’s a campaign deal, I would say bull-you-know-what.”
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