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CADE approves without restrictions the acquisition of Silat by Gerdau

Merger and Acquisition

The Tribunal denied to grant an appeal to an interested third party and maintained the Superintendency’s opinion to approve the transaction
published: Sep 24, 2020 05:28 PM last modified: Sep 24, 2020 05:28 PM
by International Unit

In the hearing of this Wednesday (23 September), the Administrative Council for Economic Defence (CADE) approved the acquisition of the management of Siderúrgica Latino Americana (Silat) by Gerdau Aços Longos. The Tribunal maintained the opinion of the CADE’s General Superintendency to approve the transaction without restrictions.

The merger and acquisition concerns the steel segment and regards a 96.35% acquisition by Gerdau of the shares representing Silat’s share capital. The other 3.65% will remain under the ownership of ADECE (Agência de Desenvolvimento Econômico do Estado do Ceará).

The General Superintendency approved the transaction in a direction published in the Official Gazette in June. However, the company Companhia Siderúrgica do Espírito Santo (Simec), qualified as interested third party in the case, lodged an appeal to the Tribunal against the decision. In the appeal, the competing company alleged the transaction had an anticompetitive purpose and no economic rationality.

In reviewing the case, the rapporteur commissioner, Sérgio Ravagnani, stressed out that the long steel segment has gone through consolidations in recent years, and that CADE was concerned with maintaining proper competition levels when reviewing other transactions in this market, including imposing structural remedies to provide new entries and strengthen other competitors. Thus, the transaction between Silat and Gerdau did not raise any competition concern that would justify an intervention by the antitrust authority.     

“I do not understand as valid the concerns raised by Simec regarding the apparent lack of economic rationality of the transaction, given the documents and clarifications provided, as well as the apparent anticompetitive purpose of preventing competitors from entering the market, which could challenge the probable monopsony power of Gerdau in the market of scrap in the northeast region,” concluded the commissioner.

Hence, CADE denied to grant the appeal and maintained the decision of the Superintendency to approve the transaction without restrictions.

Access the Administrative Proceedings 08700.000472/2020-39.