Suit-Kote Corporation on Jones & Gifford Avenue (Google Maps)
A proposed merger between Suit-Kote Corporation and Colas Inc. has been altered by New York State in order to prevent the entity from becoming a monopoly.
The U.S. Department of Justice had terminated its review of the merger, which would have allowed it go forward, but the State Attorney Generals for New York and Pennsylvania continued their investigations.
As a result, Colas must sell one of its facilities in Pennsylvania and three former Suit-Kote facilities in New York to a qualified buyer to maintain competition.
Attorney General Letitia James said, “No one should be forced to pay unfair prices for safe, well-maintained roads. Protecting competition in this industry will ensure New Yorkers’ tax dollars are spent fairly and asphalt companies will continue to provide high-quality services to our towns and counties.”
Colas and Suit-Kote are asphalt companies that both provide road repair services in New York and Pennsylvania. In New York, the majority of road mileage is comprised of county and local roads, which are maintained by county and local governments. Because county and municipal highway departments rarely have the specialized crews and equipment needed to perform the necessary road repairs, they often rely on “turnkey” service providers like Colas and Suit-Kote who both supply the asphalt and apply it to repair the roads.
The OAG’s investigation found that for several counties in Western and Central New York, including Chautauqua County, Colas and Suit-Kote were often the only two regular bidders for turnkey road repair services. The proposed merger under Colas threatened to eliminate this competition, giving Colas the power to demand higher prices and eliminating its incentive to invest in higher quality services and innovation.
Under the settlement, Colas will be required to sell several of its locations to a single, competitive buyer. Colas must sell Suit-Kote’s regional headquarters in Jamestown, its manufacturing and storage facilities in Buffalo and Belmont, and a Colas facility in Bloomsburg, Pennsylvania. The buyer will also have the option to purchase additional equipment from Colas, such as vehicles for transporting and applying asphalt. The locations Colas is required to sell include facilities that are strategically located to serve customers throughout Western and Central New York, with easy access to key suppliers and ample capacity to produce millions of gallons of asphalt emulsions each year. As a result, local and county governments in areas affected by the merger will continue to have competing options for road maintenance services.
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