Times Of Swaziland: EMASWATI SAVED FROM REDUCED CHOICE OF PAINT EMASWATI SAVED FROM REDUCED CHOICE OF PAINT ================================================================================ Nhlanganiso Mkhonta on 21/08/2024 07:22:00 LIVINGSTONE, ZAMBIA – The likelihood of reduced choice for decorative coatings in the COMESA member States of Eswatini, Zambia and Zimbabwe has been prevented by the intervention of the COMESA Competition Commission (CCC). This reduced choice for consumers would have come with the Akzo Nobel NV proposed acquisition of the Decorative Coatings Business of Kansal Plascon East Africa Proprietary Limited and Kansai Plascon Africa Limited in Eswatini, Zambia and Zimbabwe. According to the Common Market for Eastern and Southern Africa (COMESA) Competition Commission Chief Executive Officer (CEO) Dr Willard Mwemba, this was the first merger which was prohibited by the CCC and it was prohibited in three COMESA member States; Eswatini, Zambia and Zimbabwe. Dr Mwemba was addressing members of the media from the different COMESA member States gathered at Livingstone, Zambia for their 8th Business Reporters Workshop. The workshop started on Monday and yesterday, the commission held a press conference to highlight some of its work and achievements for the past year. Producer It is worth noting that Akzo Nobel NV is a paint producer of which their popular brand in Eswatini is the Dulux Paint, while Kansai Plascon is also another paint producer of the popular Plascon paint. Both brands are sold countrywide. The merger was notified to the CCC in 2022. It involved merging parties who were active in the manufacture and supply of decorative and industrial coatings in the Common Market. It was noted from the analysis that the merging parties were each other’s closest competitors in terms of price and quality, and that the merger would substantially lessen competition in the common market. It is important to state at this point that, competition regulators seek to ensure where a proposed merger raises competition concerns, those concerns should not outweigh the procompetitive effects and public interest considerations envisaged in that market. In this present merger, which the CCC prohibited, the following concerns were noted. Strengthening According to the CEO, the merger would have resulted in the creation and/or strengthening of market power in the broad market for decorative coatings.Dr Mwemba said the popularity of the brands of the merging parties and their perceived quality level would have led to no effective substitutes to whom customers and or retailers could reasonably turn to if the merged entity were to engage in abusive conduct.He said the merging entities proposed remedies to these competition concerns, which were observed in Eswatini, Zambia and Zimbabwe. However, the remedies were not (in the CCC’s view) sufficient to address the competition concerns and hence the prohibition. The Competition Commission of South Africa also had an opportunity to review the merger, on aspects affecting the South Africa jurisdiction, and they too observed similar concerns as noted by the CCC, thus resulting in a prohibition in that country. Another intervention by the CCC in 2023 was involving Heineken/Distell/ Namibia Breweries Merger. Transaction This merger transaction was notified to the CCC in July 2022. It involved the increase of shareholdings by Heineken in Namibia Breweries and acquisition of Distell’s flavoured alcoholic beverages, wine and spirits businesses. The CCC noted that the three parties to the merger were all active in the production and distribution of various types of alcoholic beverages and some non-alcoholic beverages within the common market of the COMESA Region. There were various competition concerns identified by the CCC with respect to this transaction in particular COMESA member States, Eswatini, Zambia and Zimbabwe. It was noted that Heineken and Distell were the only two significant suppliers of ciders at the time of the consideration of the merger, thus this merger could lead to monopolisation of the ciders market in Eswatini, Zambia and Zimbabwe. It was also particularly noted as follows: In Eswatini, the merging parties were effective rivals in the ciders markets and thus the transaction could result in eliminating all effective competition. Alternative In Zambia and Zimbabwe, it was noted that Heineken’s brand accounted for a relatively small share of the market, however, its presence on the market offered an alternative choice to consumers of the Distell brands. In his address, Dr Mwemba said the CCC, having taken note of the competition concerns, issued a conditional approval of the merger to ensure that competition is maintained in the market, in light of the merger. Competition authorities usually issue conditions in transactions where they note competition concerns. However, these concerns can be managed.Thus, the adjudicative arm of the CCC, the Committee Responsible for Initial Determination, issued conditions of divestiture, being the first substantial divestiture to be imposed by the CCC, and behavioural remedies (which included the restriction on bundling of beer and cider brands) and requiring an objective criterion in appointment of distributors. The divestiture involved the selection of Cider House Investments Proprietary Limited (CHI) as the buyer for Heineken’s Strongbow business in Eswatini, Zambia, and Zimbabwe in December 2023. CHI is a partnership between Signal Hill Products Holdings Proprietary Limited and Livor Investments Proprietary Limited. An extensive assessment was carried out by the CCC to ensure that the terms and conditions of the Trademark Licence Agreement would not affect the ability of CHI to manufacture and distribute Strongbow as an independent competitive brand in the affected member States and thus, its ability to establish and effectively compete in the common market. Agreement Furthermore, the parties committed to amending the Trademark Licence Agreement to make it clear that any restrictions on passive sales referred to in their agreement shall not be applicable in any part of the COMESA. Another intervention reported was the COMESA Competition Commission imposing fine on the Confederation of African Football (CAF) and beIN Media Group LLC for Breach of the COMESA Competition Regulations. CAF is the governing body of football in Africa and has 54 member associations, which includes the national football associations of the African countries. It has exclusive rights to organise a number of competitions in Africa. Africa Cup of Nations is one such competition.