Merger Challenges: Continued Increase in State-Level Scrutiny

On October 13, 2026, the Pennsylvania Office of the Attorney General filed a complaint in the U.S. District Court for the Western District of Pennsylvania to enjoin the proposed acquisition of Suit-Kote Corporation (Suit-Kote) by Colas Inc. (Colas). Both companies make asphalt emulsions (liquid products used to repair and extend the life of roads) and provide “pavement preservation” services such as chip sealing and micro-surfacing. Their customers include the Pennsylvania Department of Transportation (PennDOT) and many of the Commonwealth’s townships, boroughs, and cities. The complaint alleges the proposed acquisition violates Section 7 of the Clayton Act, 15 U.S.C. § 18, because it would substantially lessen competition in the markets for asphalt emulsions and pavement preservation services sold within Pennsylvania.

The Attorney General’s focus on harm within Pennsylvania is a clear signal that he is prepared to act as a frontline merger enforcer, and so companies doing business in Pennsylvania should factor state-level scrutiny into their transaction planning. The AG’s invocation of independent authority under the federal Clayton Act to stop the deal outright stands in sharp contrast to traditional merger enforcement, which has been spearheaded by the federal antitrust agencies or by a coalition of state attorneys general.

That the Commonwealth is a direct purchaser from Colas and Suit-Kote may have been a motivating factor. PennDOT, other state agencies, and municipalities all purchase asphalt emulsions through supply contracts awarded under state-regulated bidding processes. Municipalities that lack the capacity, crews, and equipment to conduct pavement preservation work may also include these services in their contracts. The Attorney General argues the higher prices that could result from this transaction would thus be borne by state agencies and local governments and, ultimately, by Pennsylvania taxpayers who fund road maintenance and construction.

The Office of the Attorney General also brought this action under the Commonwealth Attorneys Act, 71 P.S. § 732-204(c), on behalf of the Commonwealth and its citizens and through its quasi-sovereign capacity as parens patriae, alleging harm to consumers and customers. The complaint alleges that the merger would eliminate head-to-head competition between two of the few suppliers able to serve large public buyers in western and central Pennsylvania. According to the Attorney General, the newly combined company would face little competitive restraint and could raise prices, reduce service quality, and slow innovation. The higher input prices would flow downstream to other contractors that buy these products and pass the costs on to their customers. Smaller municipalities, which often lack their own crews and equipment, would allegedly lose access to competitive bids for services they depend on.

On October 19, 2026, the court entered a consent Final Order resolving the case without trial and without any admission of liability by the companies. Rather than blocking the deal entirely, the order requires Colas and Suit-Kote to divest four facilities to a single buyer approved by the Pennsylvania Attorney General, along with the real property, equipment, permits, contracts, and records needed to run the facilities as ongoing emulsion and pavement preservation businesses. Colas must also fund up to $3 million to build a new emulsion mill and, at the buyer’s option, provide up to $3.5 million in pavement preservation equipment at certain facilities. For five years after closing, the parties must give the Attorney General 60 days’ notice before acquiring any additional Pennsylvania emulsion or pavement preservation facilities valued at more than $7 million. The order terminates once the parties satisfy all of their obligations and is void if the acquisition does not close.

The next day, the New Jersey Attorney General filed suit challenging CRH PLC (CRH)’s proposed acquisition of Arcosa, Inc. (Arcosa), a deal valued at upwards of $8.5 billion. The complaint alleges that CRH, through its subsidiary, and Arcosa are two of the largest firms that compete in the manufacture and sale of hot-mix asphalt used for road construction in New Jersey. The proposed acquisition allegedly violates Section 7 of the Clayton Act, 15 U.S.C. § 18, because it would substantially lessen competition in the market for the manufacture and sale of hot-mix asphalt in central New Jersey, as the two companies directly compete with one another to supply hot-mix asphalt to the New Jersey Department of Transportation (NJDOT) and other purchasers. The same day, the parties also submitted a proposed consent final judgment.

The New Jersey lawsuit followed a playbook similar to the Pennsylvania lawsuit: it was brought by the state attorney general under Section 16 of the Clayton Act to enjoin acquisitions concerning road-building materials purchase by a state transportation department, and both lawsuits emphasized that taxpayer-funded state purchasers would bear higher prices as a result of the transaction. Both lawsuits were also resolved by consent divestitures to a buyer approved by the attorney general, with no admission of liability, and both require advance notice of certain future in-state acquisitions.

Nonetheless, there are still meaningful differences between the two lawsuits. New Jersey’s complaint targets a single product, while Pennsylvania’s complaint encompasses two separate markets. New Jersey sued in its sovereign and parens patriae capacities, while Pennsylvania also sued as a direct purchaser. New Jersey’s proposed judgment requires divestiture of five plants within 90 days of entry, provides for a court-appointed divestiture trustee if that deadline is missed, and bars the companies from financing the buyer’s purchaser. The proposed judgment in the New Jersey matter would also last up to 10 years and allow the Attorney General to reopen the case within five years to seek additional divestitures.

State attorneys general have long participated in merger reviews, but they typically do so alongside federal agencies or other state attorneys general. Two neighboring states’ decision to file their own lawsuits to enjoin these transactions reflects a broader national trend of state enforcers taking a larger role in antitrust enforcement in recent years. It suggests that state attorneys general are willing to scrutinize regional deals where the purported anticompetitive effects are more localized. Obtaining clearance from federal regulators (or not having to apply for clearance) may no longer mean a deal is free from challenge.

Companies involved in or contemplating mergers with a regional focus, especially with an anticipated effect on Pennsylvania’s or New Jersey’s commerce, should consider the following practical takeaways. First, assess state antitrust risk early, particularly where the parties compete for local or regional customers. Second, pay close attention to transactions involving sales to state agencies or municipalities, as the State may view itself as a harmed purchaser with direct standing to sue. Finally, build state-level engagement into deal timelines and communications strategies, and do not assume that federal review is the only hurdle. If you have questions about how this action or similar actions may affect a pending or planned transaction, please reach out to Ballard Spahr’s Antitrust and Competition Group. 

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