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CADE conditionally clears the sale of Liquigás

Merger and Acquisition

The transaction involved three different M&As granted upon a merger control agreement
published: Nov 19, 2020 12:20 PM last modified: Nov 19, 2020 12:20 PM
by International Unit

This Wednesday (18 November), the Administrative Council for Economic Defense (CADE) conditionally cleared the sale of Liquigás, a subsidiary of Petrobras and market leader in the Brazilian distribution market of Liquefied Petroleum Gas (LPG), also known as cooking gas. The deal concerns three different transactions involving the firms Copagaz, Itaúsa, Nacional Gás Butano (NGB) and Fogás. The approval was conditioned to the signing of a Merger Control Agreement (ACC in its acronym in Portuguese).

According to the rapporteur commissioner of the case, Mauricio Oscar Bandeira Maia, the transaction has been reported to CADE by a fix-it-first remedy. "That is, a transaction that, prior to the antitrust analysis, already presents a remedy aiming at mitigating potential competition issues," he explained.

Thus, the firms reported to CADE that Copagaz will be the new holder of Liquigás along with Itaúsa that will hold from 45% to 49.99% of the share capital and voting stock of Copagaz. According to the petitioners, the shareholdings of NGB and Fogás aimed at mitigating potential competition concerns evidenced in some Brazilian states, in accordance to criteria established by CADE during the adjudication on the sale of Liquigás to Ultragaz not cleared by the agency in 2018.

Rapporteur Bandeira Maia also clarified that the transaction regards a new divestiture project of Liquigás and is part of the portfolio optimisation plan of Petrobras System. In his vote, Maia stressed that the structure of the Brazilian market of LPG, either bottled or bulked, consists of an oligopoly established by four companies: Liquigás, Ultragaz, NGB and Supergasbrás. According to the commissioner, the firms have around 80% of the market share for more than a decade.


After review of the case, the Tribunal verified that, due to the sale of Liquigás, the corporate restructuring submitted by the petitioners for CADE's clearance in fact consist of three different mergers.

As stated by Bandeira Maia, the main transaction concerns the acquisition of Liquigás by Copagaz/Itaúsa along with the firm NGB. The other two transactions are a result of the first one, which aim to mitigate competition effects deriving from the merger between NGB and Liquigás, firms that are among the four main distributors of LPG in Brazil, along with Copagaz, which has a smaller market share.

Besides being shareholders of Liquigás, at first Copagaz and NGB are part of a second transaction concerning the establishment of the firm NewCo 1. The firm's assets will be from Liquigás and Copagaz, which will later be transferred to NGB. Subsequently to this transfer, NGB will be withdrawn from the corporate structure of Liquigás. The establishments that constitutes the transferred assets are located in the Brazilian states of São Paulo, Paraná, Santa Catarina, Rio Grande do Sul, Goiás, Distrito Federal, Bahia, Minas Gerais, Rio de Janeiro and Mato Grosso do Sul.

Lastly, similarly to the second transaction, the third one regards the establishment of the firm NewCo 2, made up of Liquigás and Copagaz assets to be transferred to Fogás, which solely participates in this stage of the M&A. The establishments to be transferred in this case are located in the states of São Paulo and Goiás.

Antitrust remedies

The Tribunal of CADE cleared Liquigás’ sale conditioned to a set of remedies provided by a Merger Control Agreement (ACC). The General Superintendence negotiated the ACC, which includes provisions to mitigate the problems identified in the review of the case.

The ACC aimed to ensure that asset sharing and service rendering among competitors, both during the corporate restructuring and post-merger, would not favour coordination practices among them. Therefore, the agreement sets conditions and minimum terms for the acquirers to independently hold and manage the establishments they acquired in the transactions. Furthermore, it determines a trustee must supervise every aspect of the asset transfer.

“Considering the nature of the transactions requires post-merger interactions among the parties, we understand the agreements should be carried out so as to lessen service rendering among competitors after completion of the transaction. Therefore, the requirement for a trustee’s supervision and the detailed description of how some of the commitments should be monitored is an important progress that mitigates the possibility of coordination among the parties,” said the rapporteur.

The ACC also addresses concerns related to a potential exercise of market power identified in some states, both in the bottled and bulked LPG distribution markets. As to this matter, the conditions established in the agreement ensure a complete asset transfer (distribution basis and goodwill), and stimulate a new player entry in the Brazilian Southeast and Midwest regions, in which Copagaz has had a considerable participation raise.