The Competition Commission has welcomed a Competition Tribunal decision to block a merger between owners of paint manufacturing giants Dulux and Plascon over competition concerns.
The tribunal, which is the final authority in mergers and acquisitions in South Africa, endorsed an earlier decision of the commission to prohibit the deal.
The commission’s spokesperson, Siyabulela Makunga, said the watchdog was happy the tribunal confirmed the correctness of its decision.
“The commission’s investigation found that the proposed merger will result in a substantial lessening of competition, particularly in the market for the manufacture and supply of decorative coatings,” Makunga said.
“This is because the proposed merger combines the largest and second-largest manufacturers of decorative coatings who manufacture the well-known Plascon- and Dulux-branded paint products to create a dominant firm with a considerable market share.”
The merger would have seen Netherlands-based Akzo Nobel acquire South Africa’s paint manufacturer Kansai Plascon Africa.
Akzo Nobel manufactures paints and performance coatings for both industry and consumers worldwide.
Akzo Nobel’s presence in SA
The company conducts its activities in more than 80 countries including South Africa and employs over 32 000 people. Dulux is its flagship brand.
It has three manufacturing plants in South Africa – in Alberton and Vanderbijlpark in Gauteng, and in Umbogintwini in KwaZulu Natal, its largest plant in the country.
Kansai has a presence in 12 other countries in Africa.
The tribunal did not immediately give its reasons for stopping the merger, saying it would do so later.
“The tribunal heard evidence over 10 days from factual and economic expert witnesses including evidence on the commission’s market testing report on the proposed divestiture.
“Upon consideration of all the evidence presented to it, the tribunal has prohibited the proposed transaction,” said the tribunal.
South Africa’s competition authorities have barred several deals this year as they try to ensure that there is competition in key industries.
Earlier this year, the commission recommended that a deal between Vodacom and fibre providers Vumatel and Dark Fibre Africa be stopped in its tracks, stating that it raised both competition and public interest concerns.
Johann Rupert’s investment holding company Remgro owns Community Investment Ventures Holdings which owns Vumatel and Dark Fibre Africa.
