Sadolin paint brand should be operated by an independent firm, the Comesa Competition Commission (CCC) has ordered.
According to details reaching Taarifa Business Desk, the order is a condition for the approval of a proposed merger between Dutch paint maker AkzoNobel and Japan’s Kansai Plascon Paints.
Comesa directed that Dutch paint maker AkzoNobel and Japan’s Kansai Plascon Paints first divest the Sadolin paint brand to an independent competitor before the two can be allowed to merge in the East Africa market.
In 2022, June, AkzoNobel bought the assets of rival Kansai Plascon’s business in Kenya, Uganda, Tanzania Burundi, and the rest of Africa in a bid to strengthen its footprint in the region.
The takeover of Kansai Plason’s assets in East Africa is however now subject to a condition that it divests its Sadolin paint brand to an independent or third-party competitor based in Uganda.
“In the geographic cluster affecting Burundi, Kenya, Rwanda, and Uganda, the merger is approved subject to the parties divesting of the Sadolin brand to a buyer who must be capable of ensuring continued sales of the brand in Uganda for the foreseeable future,” the regulator said.
“Until the approval by the Commission, the parties commit to ring-fence their respective business in the common market. The buyer of the divested brand must not have any structural relationship with the merging parties.”
It said the divestment shall include all the required licences to enable the buyer to independently access raw materials, manufacture, distribute, and market the Sadolin brand.
“The divestiture would take the form of a perpetual royalty-free licence to manufacture and supply Sadolin branded paint in Burundi, Kenya, Rwanda, and Uganda,” CCC said.
“However, an obligation is placed on the merging parties to ensure that the divestiture be notified to the CCC within six months from the date of merger approval, failing which this aspect of the merger will also be prohibited,” the watchdog added.
The regulator said that the buyer of the divested Sadolin brand should not have any structural relationships with the merging Kansai Plascon and AkzoNobel.
It said the divestment shall include all the required licenses to enable the buyer to independently access raw materials, manufacture, distribute, and market the Sadolin brand.