Merger Alert: Tribunal prohibits merger wherein Dutch owner of Dulux paint wants to buy the owner of its local rival, Plascon, in South Africa
The following Merger Alert is for information purposes only and is not binding on the Competition Tribunal or any member of the Tribunal
| Type of matter | Parties involved | Tribunal Decision |
| Intermediate merger | Akzo Nobel N.V And Kansai Plascon Africa Ltd And Kansai Plascon East Africa (Pty) Ltd | Prohibited |
The Competition Tribunal (“Tribunal”) has issued an order prohibiting the proposed merger involving Akzo Nobel N.V.’s ("AkzoNobel") acquisition of the majority of the issued ordinary shares of Kansai Plascon Africa Ltd ("KPAL") and all the issued ordinary shares of Kansai Plascon East Africa (Pty) Ltd ("KPEA") from Kansai Paint Co. Ltd ("Kansai Paint").
Background
The proposed intermediate merger was initially prohibited by the Competition Commission (“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.
AkzoNobel is a Dutch multinational group that manufactures and sells decorative and industrial ("performance") coatings for consumer and industrial use. In South Africa, KPAL manufactures decorative coatings and industrial coatings. KPAL also manufactures colourants which are substances used to add colour to, or change the colour of, a factory-produced base paint utilizing paint tinting equipment.
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.
The Tribunal’s reasons for its decision will be issued in due course.
Issued by:
Gillian de Gouveia, Communications Manager
On behalf of the Competition Tribunal of South Africa
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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