Kansai Paint Co. Ltd v Freeworld Coatings Ltd (53/AM/JUL11) [2012] ZACT 7; [2012] 1 CPLR 140 (CT) (20 January 2012)

Kansai Paint Co. Ltd v Freeworld Coatings Ltd (53/AM/JUL11) [2012] ZACT 7; [2012] 1 CPLR 140 (CT) (20 January 2012)

The Tribunal found that the merger between Kansai Paint Co. Ltd and Freeworld Coatings Limited would not result in substantive anti-competitive effects in the automotive coatings market. The evidence showed that Kansai was not active in the decorative or refinish coatings markets, and the automotive coatings market was subject to global competition and significant countervailing power from OEMs. Pricing was close to import parity, indicating limited ability for the merged entity to exercise market power. The initial divestiture condition imposed by the Commission was found to be unwarranted and was correctly excluded from the revised conditions. The behavioural and public interest...

Citation
[2012] ZACT 7
Parties
Applicant: Kansai Paint Co. Ltd; Respondent: Freeworld Coatings Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
20 January 2012
Case Number
53/AM/JUL11
Procedural Posture
Merger Approval / Reconsideration of Merger Conditions
Outcome
Merger approved subject to revised behavioural and public interest conditions; divestiture condition removed.
Judges
Norman Manoim, Merle Holden, Medi Mokuena
Legal Topics
Merger Control, Market Definition, Public Interest Conditions, Countervailing Power, Information Flows
Competition Law Commercial and Corporate Merger Control Market Definition Public Interest Conditions Countervailing Power Information Flows

Case Brief

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Parties

Kansai Paint Co. Ltd

Applicant

Freeworld Coatings Limited

Respondent

Procedural Posture

Merger Approval / Reconsideration of Merger Conditions

Legal Issues

  1. 1 Whether the merger between Kansai Paint Co. Ltd and Freeworld Coatings Limited would substantially lessen competition in the automotive coatings market.
  2. 2 Whether the divestiture condition imposed by the Competition Commission was warranted.
  3. 3 Whether the revised behavioural and public interest conditions adequately address competition and public interest concerns.

Ratio Decidendi

The Tribunal found that the merger between Kansai Paint Co. Ltd and Freeworld Coatings Limited would not result in substantive anti-competitive effects in the automotive coatings market. The evidence showed that Kansai was not active in the decorative or refinish coatings markets, and the automotive coatings market was subject to global competition and significant countervailing power from OEMs. Pricing was close to import parity, indicating limited ability for the merged entity to exercise market power. The initial divestiture condition imposed by the Commission was found to be unwarranted and was correctly excluded from the revised conditions. The behavioural and public interest...

Court Disposition

Merger approved subject to revised behavioural and public interest conditions; divestiture condition removed.

Orders

  • The merger between Kansai Paint Co. Ltd and Freeworld Coatings Limited is approved subject to the revised conditions set out in Annexure A.
  • The divestiture of Freeworld's automotive coatings business is not required.