Business columns in Mexico’s press were quick to report in early March, following a visit by Sherwin-Williams officials, that the company was prepared to meet the terms of anti-trust regulators there to consummate its purchase of paint and coatings market leader Grupo Comex. Those terms primarily revolved around S-W’s sale of its architectural unit in Mexico to a third party, sources suggested, leaving the question of “To Whom?”

Among the competitors in the Mexican architectural segment, a host were named in the 331-page decision against the purchase in October 2013 by the Comisión Federal de Competencia Económica (CFCE)s, now headed by Alejandra Palacios. Among the Mexican competitors mentioned were: Berel; Sayer Lack; Osel; Prisa; Acuario, Optimus, Mapla and Casther. Favorites among these, according to news analysts at El Imparcial and other publications, include Berel, Sayer Lack and Osel. Multinational Axalta was also mentioned as a forerunner in the upcoming S-W sell off.

S-W Mexico, under the leadership of president Pablo García Casas, added 39 stores to its network last year, contributing to the company’s 587 dealer stores across the Latin American region. In comparison, the Comex Group touts a dealer distribution network of 3,300 stores plus 775 concessions in Mexico. Berel, which according to the CFCE detains the next largest paint and coatings distribution system in the country, has a network of about 1,000 stores.

Pinturas Berel, which operates a production facility at Santa Catarina, near Monterrey, in Nuevo Leon state, markets its Berelex Green acrylic interior paint as a VOC-free product. The company also markets enamels under the BioMetal brand, waterproofing coatings under the Kover brand, and Summa varnishes, among other products.

This disparity in market distribution was a key objection by the CFCE, which at one point noted, “The market entrance of Behr (exclusively through Home Depot distribution) is indicative that the genie in the bottle is clearly the network of distribution, which could be turned into a barrier.” Behr reportedly exports 70,000 gallons of paint per month from the United States to Mexico for Home Depot sale. While the CFCE accepts domestic census data suggesting that there are just over 12,000 paint stores in Mexico, it points out that there are “potentially 60,000 points of sale,” should a powerful contender seek to build out a network.

The CFCE also made a particular point of Grupo Comex’s idle capacity as a market advantage for S-W, should it consummate the purchase. Comex is market leader in the automotive, maritime and industrial segments, in addition to the architectural segment. While there is a total of some 377 paint and coatings manufacturers in the country, according to the CFCE document, a well-funded buyer of the Grupo Comex production system could rapidly displace many of the existing competitors in the market.

In September  2013, a stock purchase agreement between S-W and Comex was amended to extend the date, by which the agreement could be terminated by either party, to March 31, 2014. At the same time, the offer was amended to a purchase price of approximately $2.25 billion, S-W documents indicate.