If the Competition Commission says no, you know it’s a no.
That’s exactly what happened when the deal whereby Dulux wanted to buy its rival paint company Plascon in South Africa, was blocked.
AkzoNobel is a Dutch company that owns Dulux. Kansai Plascon Africa is a Japanese company that owns Plascon.
With the two biggest rivals owned by the same company, the commission felt that it would result in a substantial lessening of competition in the local industry.
“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.”
With the merger removing the two brands’ need for competing against each other, the consumer’s choice will also be reduced.
The commission also found that the companies have both the ability and incentives to foreclose some of their competitors’ access to paint colourants.
The two companies did not suggest solutions to address the anti-competitive effect of the merger adequately, according to the commission.
Image credit: The Home Depot