The planned $25 billion merger between Dulux maker AkzoNobel and US coatings group Axalta has run into trouble in Britain, after the UK competition watchdog said it could leave car repair shops facing higher prices and less choice.

The Competition and Markets Authority (CMA) said on Wednesday that its initial, Phase 1, investigation had found competition concerns in the supply of vehicle refinish coatings in the UK, the paints used by bodyshops and repair centres to repaint damaged vehicles.

According to Reuters, the regulator found that the merger would create a clear UK market leader in the sector, with the combined group holding between 40% and 50% of supply. The two companies compete closely in Britain, offering similar products and technical support and holding approvals from vehicle manufacturers and insurers.

Repair shops could lose a rival supplier

The CMA warned that losing one of the two suppliers as an independent rival could lead to higher prices, or to reduced quality and support for customers. That matters for the thousands of repair businesses that buy refinish paint every week, and ultimately for motorists paying for accident repairs.

The watchdog has given the companies until 18 November to offer undertakings that address its concerns. If no acceptable remedies are put forward, the merger will be referred for an in-depth, Phase 2 investigation, which would examine the deal in far greater detail and could take months.

Companies point to the European remedy

AkzoNobel and Axalta said in a joint statement that they were considering the CMA's Phase 1 decision, which identifies competition concerns solely in relation to UK vehicle refinish coatings. They said they aimed to address the concerns with the same remedy proposal included in the European Commission's decision.

The companies secured approval for the merger from the European Union last week, after AkzoNobel agreed to sell its vehicle refinish coatings business in Europe and the UK to address the regulator's concerns there. The divestment covers AkzoNobel's European vehicle refinish business, including its UK operations, and the companies said they would continue to engage constructively with both the European Commission and the CMA on the remedy package.

A deal agreed a year ago

AkzoNobel and Axalta announced the deal in November last year, as part of a wave of consolidation in the coatings sector, which has faced rising costs and uncertainty created by US tariffs. It is an all-stock merger of equals that would create a global coatings company with about $17 billion in annual revenue and brands including Dulux, Sikkens and International.

Shareholders of both companies voted in favour of the transaction on 5 August 2026. Despite the CMA's concerns, the two groups said they remained confident the merger would be completed by early 2027.

What happens next

All eyes are now on the 18 November deadline. If the companies offer a remedy the CMA accepts, the deal can proceed without a Phase 2 inquiry. If they do not, or if the regulator finds the offer insufficient, the merger will face a deeper investigation that could still clear it, clear it with conditions, or block it.

For now, the merger is not blocked, and the CMA's Phase 1 finding is not a final decision. But the watchdog's warning shows that, a year after the deal was announced, the two paint makers still have work to do before they can combine.