l+I Minlstere de la Department of Justice Justice Canada Canada
Section du droit de la concurrence Place du Portage, Tour I 22e etage 50, rue Victoria Gatineau (Quebec) K1AOC9 Telephone/Telephone: · (819) 956-6891 Telecopieur/Facsimile: (819) 953-9267 Courriel/Email: Lilkoff.stephane@cb-bc.gc.ca By e-mail
Mr. Patrice Lavoie Registry officer Competition Tribunal Thomas D'Arcy McGee Building 600 - 90 Sparks Street Ottawa, Ontario K1P584 \ Dear Sir, A, ONT. Subject: - The Commissioner ofCompetition v. Akzo Nobel N.V. - CT-2007-010 - Application pursuant to s.106 of the Competition Act
In the matter of the parties' joint application pursuant to s.106 of the Competition Act to have the Tribunal vary the Consent Agreement filed on December 14, 2007, Madam Justice Simpson has asked the Commissioner of Competition the following question:
·Why does the Commissioner of Competition believe that Akzo Nobel's divesture of the Para Assets without the Etobicoke production facility located in Toronto, Ontario, addresses her concerns about the substantial lessening or prevention of competition in the wholesale supply of Decorative Coatings. in Quebec?
The Commissioner's answe~ to this question is as follows. General Paint, the purchaser of the divested assets, is one of western Canada's largest decorative coatings manufacturers. It has manufacturing and retail operations in both western and central Canada. General Paint offers a full line of
Competition Law Division Place du Portage, Phase I 22nd floor 50 Victoria Street Gatineau, Quebec K1AOC9 July 17, 2008
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decorative coatings under such brand names as General Paint, Ideal Paint, Breeze Acrylic Latex, Fresh iex, Duckback and Ceiling Renu. General Paint has represented to the Commissioner that the Para arid Crown Diamond brands that it acquired from Akzo Nobel will serve in its strategy to build its prese.nce in the decorative coatings market in central and eastern Canada, including in Quebec.
General Paint currently operates manufacturing facilities in British Columbia and Ontario. With respect to the latter facility, General Paint recently built a decorative coatings manufacturing facility in Toronto, Ontario. General Paint has demonstrated to the Commissioner that it has sufficient capacity in this facility to produce the quantities of Para and Crown Diamond products that currently are being shipped to Quebec (and elsewhere), and that it also has the ability to expand production in the future.
Further, alkyd products for the Para and Crown Diamond brands would be manufactured by General Paint's B.C. plant and shipped into Central Canada. It is cost-effective to ship alkyd paint across Canada. General Paint currently manufactures alkyd paint in 8.C. for its own sales ofa lkyd products in Ontario.
Given that General Paint already has a manufacturing facility in Toronto with sufficient capacity, General Paint has asked, and the Commissioner agreed, that the Etobicoke production facility be excluded of the Para Assets to be divested. The Commissioner is satisfied that General Paint has enough current production capacity fo ensure that the Para and the Crown Diamond brands will continue to compete in the wholesale supply of Decorative Coatings in Quebec. The objectives sought through the original Consent Agreement can be achieved without the sale of the Etobicoke production facility.
Also, considering that the present application is made jointly by the parties to the .Consent Agreement, it is understood that such application is more specifically made pursuant to paragraph 106(1 )(b) of the Competition Act.
Lastly, we wish to inform the Tribunal that this letter has been discussed with counsel to Akzo Nobel N.V. and they have informed us that they agree with its contents.
Yours very truly, S~ph ,-ilk~{
C{Punsel to the Commission r
c.c. Calvin S. Goldman, Q .. - counsel to Akzo Nobel N.V. Jason Gudofsky- coun \ sel to Akzo Nobel N.V. Huy A. Do - counsel to General Paint