The Namibian Competition Commission (NaCC) has raised concerns over Amsterdam-based chemicals company AkzoNobel’s intended acquisition of paint and coatings manufacturers Kansai Plascon Africa (KPA) and Kansai Plascon East Africa (KPEA).
The competition watchdog said such a merger will wipe out local manufacturers, and change prices and product quality because their multinational operations give them an upper hand.
AkzoNobel manufactures Dulux-branded paint products, while KPA manufactures Plascon-branded decorative and industrial coatings and paints.
The competition watchdog’s concerns were revealed by NaCC Director for Merger and Acquisition Johannes Ashipala during a Tuesday stakeholder conference on based on the commission’s preliminary findings.
The position is, however, not a final verdict, as a decision will still need to be made after taking into context the view of AkzoNobel and other industrial players.
“The Commission has established that the merger may result in the parties gaining market power due to the size of their business and operations in other countries. In addition, they may price as they wish, this is because paint is a crucial material needed across all sectors and has so much economic impact. Thus, if it is allowed, we fear it may drive out local suppliers,” Ashipala said.
In addition, Ashipala said the merger of the multinational companies will further result in a lack of product range, thus constraining consumer choices.
Namibia imports 65% of its paint-related needs and boasts a 35% local production.
Meanwhile, AkzoNobel representative Patrick Smith is of the view that their merged operations will not have an impact as they will only be able to provide paint products amounting to 2 million litres, compared to alleged local production that already is above 6 million litres.
“Therefore, we that are going to have 2 million litres will not affect competition because there are already big players locally, also considering that there are local producers of up to 7 million to 8 million litres. Some of them have been in operations for over 70 years, hence its not possible to wipe them out now, if it was not possible to do so before,” stressed Smith.
If merged Smith, says AkzoNobel’s contribution to the net import will be 28%, way below 37% of their competitors including 35% of local production.
“Therefore, the merging parties are not and will not be dominant or have market power because they face multiple strong competitors. Also, mergers that have no local production facilities will have a combined share that falls below the threshold of dominance set out in Section 26 of the Competition Act,” Smith said.
“In addition, the mergers will continue to operate at a competitive disadvantage compared to local manufacturing, while in the same vein face competitive pressure from several large and credible rivals in South Africa who also export to Namibia. We also have no intention to change plans or reduce product ranges available to consumers, nor do we have the ability to incentivise and reduce consumer choices,” he added.
In terms of foreclosures, Smith said the merging parties are willing to make a commitment to continue supplying colourants in Namibia.
AkzoNobel is a Dutch multinational company that manufactures and sells paints and performance coatings for consumer and industrial use. AkzoNobel is active in over 150 countries globally.
Within Eastern and Southern Africa, AkzoNobel has manufacturing plants in South Africa, Botswana, Zambia, and Mauritius.
Meanwhile, KPAL, a subsidiary of Kansai Paint, a Japanese multinational manufacturing and selling paints and coating products globally, mainly operates in Botswana, Eswatini, Malawi, Namibia, South Africa, Zambia and Zimbabwe.
KPAL manufactures coatings used in various segments, namely decorative coatings, and industrial coatings, which include specialised coatings such as automotive refinishes, protective coatings, wood finishes and generalised coatings for industrial use.
On the other hand, KPEA is a subsidiary of Kansai Paint, with operations mainly in Burundi, Kenya, Tanzania, Uganda and Zanzibar and offers similar products to that of KPAL. KPEA has five manufacturing plants, two in Kenya, two in Uganda and one in Tanzania.
In South Africa, the country’s Competition Commission has prohibited the proposed transaction.
