1 p.m. Oct. 14, 2016 UPDATE:
Another lawsuit has been filed against a group of paving companies in West Virginia for violating anti-trust laws. On Friday, the West Virginia Department of Transportation filed the suit in Kanawha County Circuit Court. It alleges that West Virginia paving, Southern West Virginia Paving, Southern West Virginia Asphalt, Kelly Paving and other defendants have worked together to create a de facto monopoly. According to a news release, the situation has driven up asphalt prices in West Virginia by as much as 40 percent.
“About one year ago, I directed the Legal Division to review and explore option 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.”
According to the suit, 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 action of paving contractors. The increase in asphalt costs has lead to millions of dollars in overpayments, which resulted in less road construction and maintenance. The lawsuit is looking to end the monopolization and recover the overcharges that resulted.
ORIGINAL STORY: The city of Beckley is taking legal action against a group of paving companies it believes have formed a monopoly.
They city filed a complaint to the Raleigh County Circuit Court Wednesday against 15 paving plants, including those of West Virginia Paving, Southern West Virginia Paving, Southern West Virginia Asphalt, Kelly Paving, Camden Materials, American Asphalt & Aggregate, American Asphalt of West Virginia and Blacktop Industries and Equipment.
The companies are being accused of illegally combining into a monopoly and overpricing asphalt for Beckley, Bluefield and other cities around the state
“We all know what the strain on government budgets are in West Virginia,” Mike Hissam, plaintiff’s attorney, said. “And we allege in the complaint that governmental bodies in West Virginia are paying 40 percent more for asphalt than they would be in a competitive market, like the competitive market that exists in Kentucky.”
The complaint also says urgent paving projects have had to be delayed because of how expensive the alleged monopoly has increased the cost of asphalt. Along with Beckley and Bluefield, the cities of Charleston and Parkersburg have also gone to attorney Mike Hissam to sue the 15 paving plants.
“The goal of this suit is to recover the illegal overcharges that not just the cities have been charged, but the entire class that the cities represent,” Hissam said. “And to break up these companies. To create a competitive market in West Virginia again.”
59News reached out to each company named in the lawsuit. Only West Virginia Paving issued this statement in return:
“West Virginia Paving, Inc. (“WVP”) learned through several press releases that the City of Beckley, City of Bluefield, City of Charleston, and City of Parkersburg had filed lawsuits against WVP on October 12, 2016. Although WVP has not been served with any of the lawsuits, WVP obtained a copy of one of the lawsuits and believes that there is no factual or legal basis for the lawsuit. While WVP can’t prevent the cities from filing a lawsuit or prevent the cities from misrepresenting the facts outlined in a lawsuit, WVP will defend itself against these lawsuits and factual misrepresentations made by the cities.
The cities, for example, failed to note that a single asphalt plant has served the City of Beckley since the 1980’s because of the limited demand for asphalt in that city. Further, the cities failed to note that WVP purchases all of the aggregates used to manufacture asphalt for its operations in the City of Charleston from third parties so the pricing for asphalt in that city is largely determined by third parties. The lawsuit filed by the City of Charleston correctly notes that WVP’s affiliate, Southern West Virginia Paving, Inc., competes against AAA Paving & Sealing for asphalt paving projects in the City of Bluefield but failed to note that both entities are required to purchase aggregates from third parties and liquid asphalt from large oil companies. Several competitors also compete for the asphalt paving projects in the City of Parkersburg even though there is limited demand for asphalt in that city.
The cities’ assertion that WVP and various other defendants inflated the price of asphalt by up to 40% is blatantly false. During the past 10 years, the average purchase price of asphalt products sold to these cities varied between $59.91/ton and $69.03/ton. As the cities are aware, the bulk of all price changes were directly related to the cost of transportation and raw materials. Since WVP and the other defendants purchase the majority of their hauling services, aggregates, and liquid asphalt from third parties, the price of asphalt is primarily based on the prices charged by third parties for these materials and services and WVP and the other defendants could not artificially inflate prices by 40%. Moreover, these cities have the potential to reduce the price of asphalt for their projects if they would follow the lead of many other cities across the United States and issue contracts that tie the price of asphalt to an index reflecting changes in the cost of liquid asphalt. To date, these cities have refused to adopt a liquid asphalt index for asphalt paving projects so contractors bidding work in these cities are forced to charge higher prices for asphalt in order to reduce their exposure to unexpected liquid asphalt price increases implemented by large oil companies.
WVP is disappointed that its reputation has been tarnished by the misrepresentations contained in the lawsuits and looks forward to demonstrating that there is no factual or legal basis for the cities’ allegations. While WVP’s attorneys address the lawsuits, WVP’s employees will continue to focus on completing their work in safe manner and proving high-quality asphalt for projects throughout the State of West Virginia,” West Virginia Paving said.
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