Patersons of Greenoakhill, a division of Coatbridge-based Patersons Quarries, launched the action against South Lanarkshire Council after feeling it was unfairly ruled out of the tender process.
Although the written judgement from the Court of Session hearing on Wednesday has yet to be published, both parties confirmed the outcome yesterday.
It means South Lanarkshire Council is now free to award the contract. Paul Manning, South Lanarkshire Council's executive director of finance and corporate resources, said the local authority was always confident its "clear and robust procurement procedures" would see the interim suspension on awarding the contract lifted.
He added: "We welcome the decision, which will let us continue with our plan to secure quality work at the right price for this tender."
Patersons said it accepted the court decision but was pursuing further information about how the contract was awarded through freedom of information.