The SA Competition Commission has blocked a deal whereby AkzoNobel, the Dutch group that owns the paint brand Dulux, wanted to buy the owner of its local rival, Plascon, in South Africa.
Japanese-controlled Kansai Plascon Africa owns Plascon.
On Wednesday, the commission said that the proposed deal would result in a substantial lessening of competition in the market for the manufacturing and supply of paint.
“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 commission said that the companies are close competitors in terms of price, quality, and product range, and the merger would remove competitive rivalry, “thus reducing consumer choice”.
In addition, the companies have both the ability and incentives to foreclose some of their competitors’ access to paint colourants, the commission found.
The companies did not suggest solutions to address the anti-competitive effect of the merger adequately, the commission added.
AkzoNobel announced in July that it wanted to buy Kansai’s African businesses, which have an annual revenue of €280 million (R5 billion). South Africa is one of 12 African countries where Kansai has operations.
Kansai Plascon Africa has two paint plants located in Gauteng (Krugersdorp and Clayville), one in KwaZulu-Natal (Mobeni), and one in the Eastern Cape (Gqeberha). AkzoNobel has three manufacturing plants – two located in Gauteng (in Alberton and Vanderbijlpark) and one, its largest, in KwaZulu-Natal (in Umbogintwini).
Kansai took control of Plascon in South Africa a decade ago as part of a hostile takeover. Plascon is a South African brand which was established in 1889 in Johannesburg.-fin24
