AkzoNobel headquarters, 2019 file photo. Ceescamel / CC BY-SA 4.0.
AkzoNobel and Axalta plan to offer the sale of AkzoNobel’s European vehicle-refinish coatings business, including its UK operations, to address British competition concerns that threaten to push their merger into a deeper investigation.
The companies outlined that response Wednesday after the Competition and Markets Authority found that combining their car-repair paint businesses could leave UK bodyshops and repair centres facing higher prices or weaker quality and technical support. The regulator gave them until November 18 to propose a remedy; it has not accepted the proposed sale.
In their joint response, issued at 3:07 a.m. Eastern time, the companies said the divestment package was the same one they had agreed with the European Commission. They said they would continue discussions with both regulators and remained confident of completing the merger by early 2027. That timetable is the companies’ expectation, not a UK clearance.
The CMA’s phase-one assessment found that AkzoNobel and Axalta compete closely in vehicle-refinish coatings, the paints and coatings used to repair and repaint vehicles. They offer similar product ranges and technical support and hold extensive approvals from vehicle manufacturers and insurers. Together, they would become the clear UK market leader, with a combined share of supply of 40% to 50%.
Other suppliers would remain, but the watchdog found that they would not provide enough competition to replace the rivalry being lost, particularly at the premium end of the market. Its concern is about the coatings supplied to repair businesses, not a finding that every part of the two companies’ paint portfolios presents a competition problem.
The CMA found no significant competition concerns in thermosetting powder coatings across the UK and European Economic Area. Those coatings provide durable finishes for architectural, industrial and automotive uses. The regulator said alternative suppliers would collectively constrain the merged company, while customers could source different products from different suppliers and shift purchases between them.
Under the UK review process, the merger will be referred for an in-depth phase-two investigation if the companies do not offer undertakings by the deadline, or if the CMA finds their proposal insufficient. Wednesday’s decision is a phase-one competition finding, not a final prohibition or an announcement that phase two has already begun.
Netherlands-headquartered AkzoNobel and US-headquartered Axalta are major international coatings suppliers. The companies describe the proposed combination as a business with approximately $17 billion in revenue, spanning products including powder, aerospace, vehicle-refinish, marine and decorative coatings.
JBizNews Desk | London
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