Mexico’s regulator blocks Sherwin-Williams $2.34-bn acquisition of Consorcio Comex

Mexico's antitrust regulator has blocked the $2.34 billion acquisition of local paint company Consorcio Comex by its larger US rival Sherwin-Williams Co on the ground that the merged company would be able to set artificially high prices.

Cleveland-based Sherwin-Williams yesterday said in a statement that The Federal Competition Commission (FCC) voted 3 to 2 to block the deal.

''The company is reviewing the rationale for the Commission's decision and expects to respond to the Commission's concerns in the near future,'' it said in the statement.

Christopher Connor, chairman and CEO of Sherwin-Williams, said, ''We are disappointed by this decision, but remain hopeful that we can adequately address the Commission's objections and proceed with the transaction.''

The FCC said in a statement that the merged company would have a market share of 48 per cent to 58 per cent, depending on the product, which would be as much as 10 times the share of its closest competitor.

''It would have been able to set artificially high prices and commit anti-competitive practices to the detriment of consumers,'' the FCC said.

In November 2012, Sherwin-Williams signed a definitive agreement to acquire Consorcio Comex, a leader in the paint and coatings market in Mexico for $2.34 billion in cash, including debt.

Founded in 1952, Mexico City-based Comex is a privately held company with operations in Latin America, the US and Canada.

The company manufactures and sells architectural and industrial coatings as well as several industrial, protective and specialty coatings in Mexico through 3,300 points of sale operated by 750 concessionaires.

In the US, Comex sells its products under a variety of brand names through 240 company-operated paint stores.

Comex operates eight manufacturing sites in Mexico, five in the US and three in Canada, and had 2011 sales of $1.4 billion.