COMESA queries new Sadolin manufacturers
Sep 25, 2017
The COMESA competition commission has a mandate to vet mergers and acquisitions that affect two or more member nations
AkzoNobel, the Dutch based Sadolin brand owner has been given up to today (Monday 25th 2017) to seek retrospective approval of an agreement with a new local partner to sell, manufacture and distribute its paints in Uganda by the COMESA competition commission.
In the letter 19th September 2017, George Lipimile, the director and Chief Executive Officer of the Common Market for Eastern and Southern Africa (COMESA) competition commission warned that the transaction is null and void without its approval.
The development comes after AkzoNobel terminated its license agreement with Sadolin Paints East Africa, which is currently called Kansai Plascon, freeing itself to sign a new local manufacturer.
The COMESA CC has a mandate to vet mergers and acquisitions that affect two or more member nations involving companies whose combined turnover amounts to at least $10m (about sh36b).
"Kindly be informed that the COMESA competition commission has become aware through the media that Akzo Nobel Powder Coatings has entered into sales, manufacturing and distribution agreements with a local paint manufacturer in Uganda," Lipimile said.
"I wish to inform you that, mergers and any other forms of agreements between competitors are required to be notified to the Commission….without such notification, and subsequent approval by the Commission, such transactions are null and void ab initio and no rights or obligations imposed on the participating parties shall be legally enforceable in the Common Market," he explained.
Lipimile warned the firm about a possible fine worth 10% of the combined turnover with its new manufacturer should it be found in violation of COMESA Competition Regulations.
In an earlier interview, Johann Smidt, the Director for AkzoNobel Decorative Paints in Sub-Saharan Africa said that the company intends to sink significant funds to support a new local producer of Sadolin paint in Uganda, before moving to other countries in the region due to the relatively big brand equity it enjoys in the country.