CADE’s General Superintendence concludes opinion about transaction between Petrobras and Petrotemex
The General Superintendence of the Administrative Council for Economic Defense – Cade, in a decision published in the Federal Official Gazette on 18 December, forwarded to the analysis of CADE’s Administrative Tribunal the acquisition of the Companhia Petroquímica de Pernambuco – PSUAPE and the Companhia Integrada Têxtil de Pernambuco – CITEPE, currently owned by Petrobras, by the Grupo Petrotemex (Merger 08700.004163/2017-32), recommending its approval conditioned upon the adoption of antitrust remedies.
The transaction affects inputs and products of the polyester chain: purified terephthalic acid (PTA), PET resin and textile polyester filament.
According to the opinion, the merger does not raise competition concerns in the textile polyester filament market, since the overlap between the parties is minimum. In the resin PET market, the transaction is also unable to produce effects, since there is no concentration between the parties.
However, the Superintendence’s analysis concluded that there is a horizontal overlap in the PTA market and a reinforcement in the vertical integration between the markets of PTA and PET resin. Considering the geographical PTA market Brazil/Mexico, the merger would generate a monopoly of the new company.
For these reasons, CADE’s General Superintendence concluded that the transaction could not be approved in the exact conditions of the paperwork filed at the authority. Therefore, the General Superintendence forwarded the merger to the analysis of CADE’s Tribunal, which is responsible for issuing a final decision, and recommended its approval conditioned upon the signature of a Merger Control Agreement (ACC in its acronym in Portuguese).
The ACC was proposed by Petrotemex and encompasses behavioral remedies, which, according to the Superintendence’s opinion, can address the competition concerns pointed out after the analysis of the transaction. The Superintendence’s opinion is not binding.
The paperwork for the merger was submitted to CADE on 7 July and the authority is legally due to issue a final decision within 240 days, which could be extended for 90 more days.