On January 14, 2009, the Federal Trade Commission (“FTC”) filed a suit to block the proposed $540 million assets and interest acquisition of Pavestone Co. (“Pavestone”) by rival Oldcastle Architectural, Inc. (“Oldcastle”) because it would reduce competition in the manufacture and sale of drycast concrete hardscapes.
Both companies manufacture and sell drycast concrete hardscape products, which are landscaping products that include interlocking concrete pavers, segmented retaining wall blocks, and other drycast concrete patio products to national home centers like The Home Depot, Lowe’s, and Wal-Mart.
Drycast concrete patio products are usually heavy and cumbersome products. To keep transportation costs to a minimum, companies like Old Castle and Pavestone build manufacturing plants within 200 miles of national home centers. As such, on deciding where to build plants, both companies typically bid on which home centers to supply their products. The proposed acquisition would reduce competition in the bidding process in the relevant geographic markets. Oldcastle and Pavestone are the only companies with plants throughout the country that are able to provide a broad range of drycast concrete hardscapes. According to the FTC, the combined companies would control 90 percent or more of the sales to national home centers in 300 metropolitan areas in 40 States and the District of Columbia. Oldcastle, if it were to acquire Pavestone, could unilaterally increase prices and lower the quality of services related to these products in the relevant geographic markets.
Furthermore, according to the complaint, the combined companies will control 75 percent of sales of drycast concrete hardscape products in the State of Texas. Commercial customers in the Dallas, Houston, and San Antonio areas will feel the resulting anticompetitive effects.
The FTC vote to issue the administrative complaint was 4-0. The parties abandoned the deal after the FTC took action.