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CADE approves with restrictions the acquisition of Nike do Brasil by Centauro

Merger and Acquisition

The transaction was approved upon a merger control agreement
published: Nov 05, 2020 03:49 PM last modified: Nov 05, 2020 03:49 PM
by International Unit

In the hearing of this Wednesday (4 November), the Administrative Council for Economic Defense (CADE) approved with restrictions the acquisition of Nike do Brasil by the group SBF, financial controller of Centauro. The transaction was approved upon a merger control agreement to ensure isonomy principles in the distributions of Nike products.

The rapporteur commissioner of the case, commissioner Luis Braido, explained that the transaction raises competition concerns regarding the vertical integration of the companies since SBF/Centauro would be the exclusive distributor of Nike products in Brazil. Therefore, the rapporteur justified his view that mechanisms are necessary to discourage potential anticompetitive behaviours that could derive from the transaction, ensuring the proper operation of the market as well as consumers interests.

"Given the analysis held throughout this vote and considering the information provided by the petitioners of the case due to the additional discovery stage held by my Office, a Merger Control Agreement has been negotiated aiming at establishing behavioural measures that impede and prevent practices that could result in anticompetitive biases for Nike do Brasil costumers, and that impede SBF/Centauro and Nike do Brasil from having access to sensitive competition information," stated Braido.

The Tribunal of CADE understood the rapporteur's view and decided to approve the transaction with the condition of fulfilling the agreement.

Merger Control Agreement

The signed Merger Control Agreement (ACC) determines, among other measures, the division of the business units of Centauro and Nike do Brasil. Thus, the collaborators of the commercial team of Nike do Brasil will not provide services for Centauro. Besides, they will sign a confidentiality agreement and will be subject to quarantine in case of possible transfers to the commercial team of Centauro. Furthermore, the information and documents related to the commercial operation of the business unit of Nike do Brasil will be maintained segregated from the database of Centauro within the systems of SBF group.

Nike must also maintain a structure (named CaSA) that will implement mechanisms to supervise SBF activities. The SBF group will be obliged to report and provide to CaSA the complaints received from third parties regarding potential anticompetitive conducts concerning Nike products distribution. CaSA will be committed to discuss with SBF or hold an investigation of the received complaints.

Besides, the ACC also foresees that the SBF will have an independent reporting channel to third parties and collaborators report potential discriminatory or anticompetitive practices, as well as the access to competitively sensitive information.

The obligations agreed in the ACC will be supervised by an independent external monitor (trustee), who will produce reports to ascertain the fulfilment of commitments related to the principle of isonomy. Probable anticompetitive bias and exchange of sensitive information between Centauro and Nike do Brasil must also be reported to CADE.

The ACC is valid for a three-year term that begins on the date of its approval and can be extended for additional two years if proved necessary. Additionally, the agreement foresees a fine application in case of partial or total non-compliance of the established clauses.