The Phase 1 finding is not a final determination that the merger would harm competition. It means the evidence met the threshold for additional investigation unless the identified concern can be resolved through an acceptable undertaking.

Vehicle Refinish Market Raises Concern

The CMA examined the companies’ activities in two coatings markets: vehicle refinish coatings and thermosetting powder coatings.

Vehicle refinish coatings are used by collision-repair centers and body shops to repair and repaint vehicles. The CMA said AkzoNobel and Axalta are close competitors in the U.K. market and each offers broad product systems, technical assistance, training and other support to repair customers.

According to the regulator, their combined share of U.K. vehicle refinish supply would be approximately 40% to 50%. Although other competitors would remain, the CMA concluded that they might not provide enough competition to replace the rivalry between AkzoNobel and Axalta, particularly in the premium portion of the market.

The regulator said the resulting loss of competition could expose customers to higher prices or reductions in product quality and support.

Vehicle refinish systems can involve more than the coating itself. Body shops may consider color-matching capabilities, application processes, training, technical service and approvals from vehicle manufacturers or insurers when selecting a supplier. Those requirements can affect how readily a repair business can switch between competing systems.

Powder Coatings Market Cleared

The CMA reached a different conclusion regarding thermosetting powder coatings.

Although it described AkzoNobel and Axalta as moderately close competitors in that market, the regulator said customers would continue to have sufficient alternatives in the U.K. and European Economic Area.

The CMA also pointed to widespread multisourcing. Powder-coatings customers can use different suppliers for different product requirements and shift purchases among competitors. The regulator therefore did not identify significant competition concerns in thermosetting powder coatings.

Companies Plan to Offer European Remedy

AkzoNobel and Axalta said the CMA’s concern is limited to vehicle refinish coatings in the U.K. The companies intend to address it with the same remedy package offered to the European Commission.

That package calls for the divestment of AkzoNobel’s European vehicle refinish business, including its U.K. operations.

The European Commission granted conditional approval to the merger Nov. 6 after accepting the proposed divestiture. The companies said the sale would remove the overlap identified by European regulators while allowing the remainder of the transaction to proceed.

AkzoNobel and Axalta said they will continue working with both the European Commission and CMA on the remedy. They remain confident that the merger can be completed in early 2027, subject to remaining approvals and closing conditions.

The proposed combination would create a global coatings company with approximately $17 billion in annual revenue and operations spanning powder, aerospace, vehicle refinish, mobility, marine and protective, industrial and decorative coatings.

The transaction has not closed, and AkzoNobel and Axalta continue to operate as separate companies.

The immediate next step is the Nov. 18 deadline. If the companies submit a proposed undertaking, the CMA will determine whether it is sufficient to address the vehicle refinish concern under the Phase 1 standard. If no acceptable remedy is offered, the regulator will begin a more detailed Phase 2 investigation.

Sources: https://assets.publishing.service.gov.uk/media/6af40960e84419943c0a21c8/Summary_of_phase_1_decision.pdf, https://www.gov.uk/cma-cases/akzonobel-slash-axalta-merger-inquiry