Comesa queries AkzoNobel on local firm purchase plans

A new bilboard of Sadolin Paints reiterating the Sadolin brand presence in the market. AkzoNobel is said to be in final stages of negotiation with a local partner in the region. PHOTO BY ABUBAKER LUBOWA

What you need to know:

  • Deal. The paint manufacturer is said to have plans to buy a local paint producer in the country.

Kampala. The Common Market for Eastern and Southern Africa (Comesa) Competition Commission has written to AkzoNobel Coatings asking them to respond to a notification of Sales, Manufacturing and Distribution Agreements with local paint manufacturers in Uganda.
The competition commission faults the Dutch manufacturer for allegedly failing to notify it about their planned acquisition of a local paints manufacturer in the region.
“..kindly be informed that the Comesa Competition Commission (“the Commission”) has become aware through the media that Akzo Nobel Powder Coatings (“Akzo Nobel”) has entered into Sales, Manufacturing and Distribution agreements with a local Paint Manufacturer in Uganda,” the letter which Daily Monitor has seen, read in part.
The September 19 letter, by Mr George K Lipimile, the director and chief executive officer Competition Commission, asked AkzoNobel to respond their position on the matter not later than Monday September25, 2017.
“...Notification of agreements and mergers enables the Commission to determine if such agreements between competitors would lead to a substantial prevention or lessening of Competition,” the letter reads in part.
This comes after AkzoNobel terminated their contract with Sadolin Paints East Africa limited over what it deems as “numerous breaches” by their former licensee that was acquired by Kansai Plascon.
According to Mr Johann Smidt, the AkzoNobel managing director, following an acquisition announcement of its AkzoNobel Paints Licensee, Sadolin Paints East Africa Limited, by its competitor Kansai Plascon, AkzoNobel took the decision to issue notice of cancellation to the licensee.
He said AkzoNobel was in the final stages of negotiation with a local partner in the region.
“Without such notification, and subsequent approval by the Commission, such transactions are declared null and void ab initio and no rights or obligations imposed on the participating parties shall be legally enforceable in the Common Market. Firms engaged in conduct likely to violate the Regulations may also be sanctioned to a fine of up to 10 per cent of their combined annual turnover in the Common Market,” he said
Mr Willard Mwemba, the Competition Authority Mergers and Acquisitions manager, said the Commission has not been informed of this development by the parties.
“However, we have become aware through the press and our own market intelligence that there are some forms of arrangements between Akzonobel and Regal Paints that may need to be notified to the Commission,” he said.
He added: “Failure to do so may render null and void any such agreements especially those that present themselves with elements of a merger pursuant to the Comesa Competition Regulations.”
According to Mr Mwemba any such arrangement carried out in contravention of the Regulations shall have no legal effect in the Common Market and no rights or obligations imposed on the participating parties by any agreement in respect of the merger shall be legally enforceable in the Common Market.