Plascon and Akzonobel merger halted

The proposed amalgamation between AkzoNobel (manufacturer of Dulux) and Kansai Plascon Africa has been stopped in its tracks by the Competition Commission, which believes it will lead to substantially lessened competition in South Africa.

The Commission found that the proposed merger will result in a substantial lessening of competition in the market for the manufacturing and supply of decorative coatings. This is because the proposed merger combines the largest and second-largest manufacturers of decorative coatings who manufacture Plascon- and Dulux-branded paint products to create a dominant firm with a considerable market share. “The merging parties are close competitors in terms of price, quality, and product range and the merger would remove competitive rivalry between two notable brands, thus reducing consumer choice,” the Commission stated. 

In addition, the Commission found that the proposed merger is likely to result in concerns relating to the manufacturing and supply of colourants as the merging parties have both the ability and incentives to foreclose some of their competitors’ access to colourants. 

The merging parties did not provide evidence of merger-specific technological, efficiency, or another pro-competitive gain that will be greater than and offset the effects of the prevention or lessening of competition arising from the proposed transaction, nor substantially weighty public interest commitments that would outweigh the competition concerns. The merging parties had also not put up remedies likely to adequately address the anti-competitive effect of the merger.