Regulator blocks proposed Dulux, Plascon merger

SA’s antitrust regulator has rejected a proposed merger of paint manufacturers Dulux and Plascon on the grounds that the deal would substantially diminish competition in the local market.

The Competition Commission said the parties — Amsterdam-based AkzoNobel, which owns Dulux, and Plascon parent Kansai Plascon Africa — are close competitors in terms of price, quality and product range, and the merger would remove competitive rivalry between two notable brands, thus  reducing consumer choice.

The proposed merger of “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 in a statement.

The merging parties did not provide evidence the merger would lead to technological, efficiency, or other pro-competitive gains “that would be greater than and offset the effects of the prevention or lessening of competition arising from the proposed transaction, nor substantially weighty public interest commitments that would outweigh the competition concerns”, the regulator added.

“The merging parties had also not put up remedies likely to adequately address the anticompetitive effect of the merger. The commission has therefore concluded that the proposed merger is likely to result in a substantial prevention or lessening of competition.”

AkzoNobel manufactures Dulux coatings used in various segments that are primarily divided into decorative coatings and industrial coatings, which include automotive, marine, wood and other speciality coatings.

It has three manufacturing plants in SA — two in Gauteng and one, its largest, in KwaZulu-Natal.  

Kansai Plascon Africa has four manufacturing plants in SA — two in Gauteng, and in KwaZulu-Natal and the Eastern Cape (Gqeberha). It also has two plants in Zimbabwe and one in each of Malawi and Zambia.

phakathib@businesslive.co.za