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WVDOT Files Antitrust Suit Against Asphalt Companies

October 16th, 2016 by WCBC Radio

The West Virginia Department of Transportation (DOT) and Division of Highways filed an antitrust suit Firday against a group of asphalt companies that have worked together to create a monopoly that has driven up asphalt prices in West Virginia by as much as 40 percent.

 

The suit alleges that the defendants — including West Virginia Paving, Southern West Virginia Paving, Southern West Virginia Asphalt, Kelly Paving and others — are no longer competing but instead have worked together to create a de facto monopoly that allows them to charge inflated prices.

 

With the assistance of one of the nation’s leading antitrust consulting firms, the DOT’s Legal Division has identified a pattern of questionable conduct among certain asphalt manufacturers and paving contractors that has strangled competition, compromised quality, and resulted in millions of dollars of improper charges by many asphalt contractors.

 

“About one year ago, I directed the Legal Division to review and explore options to redress apparent anti-competitive behavior and monopolistic conduct in West Virginia’s asphalt market,” said Transportation Secretary Paul Mattox.  “We have now concluded that filing this complaint is necessary to ensure our taxpayers aren’t unfairly bearing the financial burden of this improper behavior.  We will continue to review conduct among asphalt manufacturers and other contractors and launch future initiatives to promote competitive pricing.”

 

The DOT’s suit was filed in Kanawha County Circuit Court by attorneys Ben Bailey and Mike Hissam, former federal prosecutors and partners at Bailey & Glasser LLP in Charleston. 

 

According to the suit, the defendants have cooperated to eliminate competitors and maintain the appearance of a competitive marketplace, while actual competition disappeared.  The defendants have gained control of at least 15 asphalt plants in West Virginia that once competed with each other.  They have also acquired or combined numerous paving companies, allowing them to control both the supply of asphalt and the actions of paving contractors.  Those actions have forced West Virginia’s taxpayers to pay as much as 40 percent more than they should, allowing the defendants to reap millions of dollars in overpayments. These overcharges have resulted in less road construction and maintenance. The lawsuit seeks to end this monopolization and recover the overcharges that resulted.

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