CADE blocks acquisition of mangels steel unit by Armco
The Brazilian Administrative Council for Economic Defense – CADE - blocked the acquisition of Mangel Industrial S/A ’s guard rails and galvanized steel units by Armco Staco S.A. , at the judgment session on Wednesday, October 9th.
Guard rails are a type of barrier used on streets, avenues, and highways to protect vehicles. Galvanization is the fire treatment given to steel structures used to manufacture guard rails. The Tribunal of CADE understood that the operation (Merger File no. 08700.004054/2012-19) led to high concentration of almost 70%. Thus, it determined the sale of Mangels’ Unit that had been acquire by Armco, all to occur under the same operational conditions.
The acquisition was notified to CADE in 2012 under the rules of the former competition law (Lei 8.884/94).
Block – The May 2013 General Superintendence’s Official Opinion had already recommended the operation block. According to the reporting commissioner, Ricardo Machado Ruiz, the merger consists on the acquisition of Mangels’ unit (second largest company in the Brazilian guard rails market) by the dominant player Armco.
Also according to him, the remaining market competitors, potential importers, and incomings companies would not be sufficient to preserve competition under guard rails market. Hence, the operation could bring negative effects on products’ trading.
“In this operation it is likely that the concentration would result in injuries to guard rails direct consumers, as the increase of prices paid by highway concessionaires and Governments, responsible for roads and highways maintenance. To demonstrate such impact, there is the example of the Program for Federal Road Concessions launched in August 2012. This program manages the concession to private companies the control of a total of 7,5 thousand kilometers of highway”, according to the statement of the reporting commissioner.