THEE - The Competition Commission - Kansai`s acquisition of Freeworld
JSE
THEE
THEE - The Competition Commission - Kansai`s acquisition of Freeworld
approved with conditions
PRESS RELEASE
19 April 2011
KANSAI`s ACQUISITION OF FREEWORLD APPROVED WITH CONDITIONS
The Competition Commission yesterday approved the proposed acquisition of
Freeworld Coating Limited ("Freeworld") by Kansai Paint Co. Limited
("Kansai") with conditions that address competition and public interest
concerns that arise from the transaction. Both parties are active in the
market for the supply of automotive coatings. Freeworld is also active in the
market for decorative coatings through the Plascon brand.
The automotive coatings market is a concentrated market with high barriers to
entry and linkages between the various market players through joint ventures.
The Commission found that the merger would have re-enforced concentration in
the South African market and would create a forum for collusion between
Kansai and du Pont (another multinational automotive paint company) through
the joint venture that currently exists between Freeworld and du Pont. In
order to address these concerns, the Commission requires that Kansai divest
the entire automotive coatings business of Freeworld, which includes its
shareholding in the du Pont joint venture.
In addition, the merger approval was subject to the following public interest
conditions that were raised during the Commission`s investigation:
- There will be no retrenchments for a period of three years following the
merger
- Kansai will continue to manufacture decorative coatings for a period of
10 years, and will establish an automotive coatings manufacturing
facility in South Africa within 5 years
- Kansai will invest in South African research and development in
decorative coatings
- Kansai will implement a BEE transaction within 2 years.
Commissioner Shan Ramburuth said that "collectively, these conditions address
any anti-competitive harm that would have resulted from the merger and would
ultimately increase South Africa`s manufacturing capacity in the paint
market."
END
Further Information:
Maarten van Hoven, Manager: Mergers & Acquisitions
012 394 3295/083 412 7885/ maartenv@compcom.co.za
Date: 19/04/2011 13:37:09 Produced by the JSE SENS Department.
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