The Justice Department said Thursday that it will challenge the 19-month-old merger of two big Southland asphalt makers, claiming that their marriage reduces competition in the Southern California market for the paving material.
A department spokesman said the agency will file a civil antitrust suit "in a day or two" in U.S. District Court in Los Angeles that will attempt to force the merged company to shed unspecified assets in the Los Angeles area and western San Diego County.
The department also will seek to bar the asphalt-making partners who formed the joint venture from buying into any similar companies for 10 years without department or court approval.
2 of Top 3 Firms
The merger of Industrial Asphalt and Huntmix, two of the top three asphalt-concrete producers in Southern California, violates the Clayton and Sherman antitrust acts by threatening to "substantially lessen competition" in the business, the department contended in a statement. Both companies are based in Van Nuys.
But Robert Hunt, a managing director of Industrial Asphalt, said the two companies obtained Justice Department approval for the merger before it occurred. Department officials refused to discuss the case.
Both sides agree that the merged company is a major producer of asphalt concrete, which is used for paving streets and driveways. The product is made by mixing rock, sand and gravel with the byproducts of oil refining.
41% Combined Market Share
Industrial Asphalt would disclose no figures, but competitors said it leads the industry. The Justice Department said that, even before the Dec. 20, 1983, merger, Industrial was the biggest manufacturer of asphalt in the state. Huntmix was described as the third-biggest producer in greater Los Angeles.
Sales of asphalt by all companies in the region topped $130 million in 1984, according to the department statement. Bob Bridges, an engineer with the Asphalt Institute, a trade group in Sacramento, said about 13 million tons of the material is laid down annually in Southern California.
According to the Justice Department's statement, Industrial and Huntmix had a 41% pre-merger market share in greater Los Angeles: 24% for Industrial Asphalt and 17% for Huntmix. In western San Diego County, the department said, the companies had 18% and 11% market shares, respectively.
Industrial had 24 plants in California, Nevada and Arizona, while Huntmix had eight, the department said. It also said that Industrial was the second-biggest supplier in the country before the merger, although Hunt said the company was not that large.
The department also said that asphalt production in Southern California is dominated by a few firms, with about three-quarters of the asphalt produced by four companies. The department did not name the companies, but competitors said another is Sully-Miller Contracting of Long Beach.