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ACCC investigating proposed acquisition of Wattyl

Published on 2006-02-13. Author : SpecialChem

The Australian Competition and Consumer Commission has begun market inquiries into the proposed acquisition of Wattyl Ltd by Barloworld Limited, ACCC Chairman, Mr Graeme Samuel, said.

"Barloworld and Wattyl are two of the three major suppliers of architectural and decorative paints* in Australia, the other being Orica", he said. "The ACCC will closely assess the likely effect of the proposed acquisition on competition.

"The three major suppliers have their own stores and commission-based resellers which principally supply trade customers, such as professional painters. The ACCC will need to consider how a merger of Barloworld and Wattyl would affect competition to supply these trade customers, as well as the effect on DIY buyers.

"Some of the issues that the ACCC will be considering include how consumer loyalty to paint brands affects the ability of smaller paint manufacturers to expand their sales; whether potential competition from manufacturers of industrial coatings, such as marine and road-marking paints, would constrain prices for architectural and decorative paints; and the extent to which trade customers could secure competitive paints, in terms of brands, price, product range and service, from alternative sources".

The ACCC will assess the proposed acquisition in accordance with its Merger Review Process Guidelines and section 50 of the Trade Practices Act 1974. Accordingly, the ACCC invites comment from other architectural and decorative paint manufacturers, paint resellers, industrial coatings manufacturers, trade customers including painters and builders, and other interested parties.

Background

*Paint supplied through manufacturers' company-owned stores and trade depots/dealerships to professional or 'trade' painters is architectural (or trade) paint. Paint supplied to retailers for resale to DIY consumers is decorative (or retail) paint.

Barloworld is the manufacturer and supplier of a number of brands of architectural and decorative paints in Australia including Taubmans, Bristol and White Knight. Wattyl supplies the Wattyl range of paints. On 13 February 2006, Barloworld announced a takeover offer for Wattyl. The offer is subject to clearance by the ACCC.

Orica is Australia's other major manufacturer and supplier of architectural and decorative paints, including the Dulux, British Paints, Berger and Walpamur brands.

Section 50 of the Trade Practices Act 1974 prohibits acquisitions which would have the effect, or be likely to have the effect, of substantially lessening competition in a substantial Australian market.

Source: The Australian Competition and Consumer Commission


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