AkzoNobel, Axalta get week to address UK regulator concerns over $25 billion merger

AkzoNobel, Axalta Granted Week to Address UK Regulator's Merger Concerns

UK Competition Concerns Over AkzoNobel and Axalta Merger

Background of the Merger

Nov 11 (Reuters) - Dulux paint maker AkzoNobel and US peer Axalta's $25 billion merger raises competition concerns in the UK vehicle refinish coatings market, Britain's competition watchdog said on Wednesday, giving them a week to offer remedies or face a deeper probe. 

The companies announced the deal in November last year as part of a wave of consolidation in the sector, which faces rising costs and uncertainties created by US tariffs.

Findings from the Competition and Markets Authority

Market Impact and Concerns

The Competition and Markets Authority found in its initial probe that the merger would create a clear UK market leader in vehicle refinish coatings, the paints used by repair centres and bodyshops to fix and repaint damaged vehicles, with a combined share of 40% to 50% of supply.

Potential Effects on Competition

The regulator said the two companies compete closely in the UK, offering similar products, technical support and holding extensive vehicle manufacturer and insurer approvals, and that losing one could lead to higher prices or reduced quality and support for customers.

The CMA gave the companies until November 18 to offer remedies or face an in-depth Phase 2 investigation.

Remedies and Next Steps

AkzoNobel and Axalta aim to address the CMA's concerns with the same remedy proposal that was included in the European Commission decision, the companies said in a statement, reiterating that they remain confident of completing the merger by early 2027.

European Union Approval

The companies secured approval for the merger from the European Union last week after AkzoNobel agreed to sell its vehicle refinish coatings business in Europe and the UK to address the regulator's competition concerns.

(Reporting by Yamini Kalia in Bengaluru; Editing by Mrigank Dhaniwala and Janane Venkatraman)