Sherwin-Williams $1.15 billion acquisition of BASF’s paint brand Suvinil has been approved by Brazil’s competition watchdog.
The decision by the Administrative Council for Economic Defense (CADE) was published on September 1 in the country’s Official Journal. It follows a review which concluded US firm's purchase of the Brazilian rival would not undermine competition, and that the decorative paints market had several active players in Brazil.
Sherwin-Williams announced plans to buy the Suvinil and Glasu! brands for 6.2 billion reais in February. The decorative paints market includes products for walls, ceilings, floors, metal, wood, and other surfaces such as concrete, bricks, tiles and glass, along with varnishes and enamels.
The paints segment in Brazil was “moderately concentrated,” CADE said.
Although Suvinil was a major player in Brazil, there were no legal or regulatory barriers for new competitors, it said. However, customer loyalty and brand strengthening costs could be an obstacle for a new market entrant, it added.
The review of the deal found the presence of a significant number of rivals in the market, and that consumers were likely to switch to another brand if Sherwin-Williams increased the price of its paints. The two companies had noted there were other players in the market such as Lukscolor and Tintas Renner.
"There are no apparent competition concerns arising from the horizontal overlap between the parties in the affected market,"
CADE said.
Source: MLex
