The Competition Tribunal announced yesterday that it prohibited a merger wherein Dutch owner of Dulux paint wanted to buy the owner of its local rival, Plascon, in South Africa.
The Tribunal issued an order prohibiting the proposed merger involving Akzo Nobel’s acquisition of the majority of the issued ordinary shares of Kansai Plascon Africa and all the issued ordinary shares of Kansai Plascon East Africa from Kansai Paint.
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.
The Tribunal said its reasons for its decision would be issued in due course.
The proposed intermediate merger was initially prohibited by the Competition Commission. It found that the transaction would likely result in a substantial prevention or lessening of competition in the market for the manufacture and supply of decorative coatings.
According to the Commission, the merger would combine the largest and second-largest manufacturers of decorative coatings, the Dulux and Plascon brands manufactured by AkzoNobel and KPAL, respectively.
The merging parties subsequently approached the Tribunal with a request for consideration, seeking an order that the merger be approved subject to a proposed divestiture of KPAL’s Micatex brand (a sub-brand of the Plascon brand), a supply commitment relating to colourants and other public interest related commitments.
In June last year, AkzoNobel said it was to further strengthen its African footprint after reaching an agreement with Kansai Paint to acquire its paints and coatings activities in the region.
Present in 12 countries in Africa, Kansai Paint has regional consolidated revenue of around €280 million (R5.6 billion). The transaction includes the Plascon brand, which has more than 100 years of heritage in South Africa.
AkzoNobel said together with their own Dulux brand, they were the longest-established paint brands in the region. The intended acquisition also includes automotive and protective coatings, and coatings for wood and coil.
AkzoNobel CEO Thierry Vanlancker said at the time, acquiring Kansai Paint’s activities in the region would help them to further expand their paints and coatings business in Africa and provide a strong platform for future growth.
“Kansai Paint shares our commitment to innovation and sustainability, and we look forward to combining our expertise, which would result in a wider range of innovative products and more sustainable solutions for our customers.”
AkzoNobel is a Dutch multinational group that manufactures and sells decorative and industrial (performance) coatings for consumer and industrial use.
In South Africa, KPAL manufactured decorative coatings and industrial coatings. KPAL also manufactured colourants which are substances used to add colour to, or change the colour of, a factory-produced base paint utilising paint tinting equipment.
The IndustryARC South Africa Paints And Coatings Market Overview shows that the SA paints and coatings market size was forecast to reach $2.1 billion (R3.9bn) by 2026, after growing at a CAGR of 5.6% during the forecast 2021-2026.
“With rise in building & construction sector, the consumption of paints & coatings is increasing and South Africa Paints And Coatings Market is witnessing an increase in demand.
“Paint and coatings manufacturers are enhancing their formulations owing to innovative and more sustainable solutions. Also, the highly demanding paints and coatings formulations used for architectural coatings, or industrial coatings have raised the market for South Africa Paints And Coatings Market.”
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