The European Commission has approved the proposed merger between coating manufacturers AkzoNobel and Axalta under the EU Merger Regulation. The clearance is conditional upon full compliance with structural commitments offered by both companies.
Dutch multinational AkzoNobel operates in more than 150 countries, producing paints and coatings for consumer and industrial applications. U.S.-headquartered Axalta specializes in high-performance coatings systems across more than 140 countries.
Following an initial investigation, the Commission expressed concerns that the uncommitted transaction would significantly reduce competition within the European Economic Area (EEA) market for vehicle refinish (VR) coatings. Used primarily by body shops to repair damaged vehicles, these specialized coatings require precise color matching using supplier-provided scanning and mixing hardware.
Regulators highlighted that the VR coatings market is already highly concentrated, with the four largest manufacturers controlling 80% to 90% of sales across the EEA, while all remaining suppliers hold individual market shares under 5%. Combining Axalta, the EEA market leader, with AkzoNobel, the fourth-largest supplier, would create an overly dominant entity. Additionally, auto repair garages face substantial switching costs due to proprietary color-matching equipment, and proposed transaction efficiencies were insufficient to offset potential price increases for consumers.
To resolve these competition issues, the companies committed to divesting AkzoNobel’s entire EEA VR coatings business. This remedy encompasses a dedicated manufacturing plant capable of maintaining production volumes, along with necessary operational assets, intellectual property, personnel, and transitional service agreements. The divestment must be made to a qualified purchaser already operating in coatings or an adjacent industrial sector.
By entirely removing the EEA VR overlap, the divestment creates a viable competitor capable of using AkzoNobel’s existing infrastructure to compete against the merged firm. Market test feedback confirmed that the modified transaction resolves all preliminary competition concerns.
Under Commission oversight, an independent trustee will supervise compliance. AkzoNobel and Axalta may only finalize the merger after the Commission formally approves the prospective buyer in a separate procedure.