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CADE’s General Superintendence concludes opinion on transaction between XP and Itaú


Opinion recommends the approval of the merger conditioned to the signature of a Merger Control Agreement negotiated with the parties
by Assessoria de Comunicação Social published: Dec 28, 2017 05:32 PM last modified: Dec 28, 2017 05:32 PM

The General Superintendence of the Administrative Council for Economic Defense – CADE, in a opinion published in the Federal Official Gazette of 28 December, forwarded to CADE’s Tribunal analysis the acquisition of XP Investimentos’ stake by Itaú Unibanco S/A (Merger 08700.004431/2017-16), recommending its approval conditioned to the adoption of behavioral remedies.

According to the Superintendence, the transaction, initially, raises competition concerns due to the disruptive business model developed by XP, which distributes, through its open platform, a wide variety of financial products from several asset managers, issuers and other suppliers – in opposition to the “close” model in which the traditional players of the banking system operate.    

The opinion points out that the business model developed by XP, which has been already adopted by other players in the financial market, has allowed costumers to access financial products of more quality, at lower costs and higher yields. In the banking system, these products are usually available high-profile clients who have a higher income. Therefore, the model fosters the competition not just among the new platforms and the banking system, but between the issuers and the independent managers who offer their products on these platforms.

In addition, these platforms are an important funding tool (investment fundraising) to medium and small banks, what also contributes to the competition in the credit market, a segment in which Brazil has one of the world’s biggest spreads.

According to the General Superintendence, the removal or the reduction of the competition between XP and the banks could, therefore, be very harmful to the financial products and credit markets in Brazil.

However, in the way it was dealt, the transaction deviates from the major part of these concerns. The acquisition of shareholding interest, the limitations of Itaú’s power in XP and the payment conditions of the future quotas of the acquisition limit, in a meaningful way, the risks that Itaú harms the competitiveness of the market through this operation.


Considering the relevance of the competition exerted by XP, as well as the risk of increasing its already dominant position in the market of open investment platforms with the financial support made by Itaú, the General Superintendence understands that the operation could only be approved with conditions. They aim to guarantee the commitment to not interfere and to abstain from expressing about commercial issues of XP’s business by Itaú and its nominees; and the reduction of barriers to entry and to the development of new players in the open investment platforms segment. 

The Merger Control Agreement (ACC in its acronym in Portuguese) negotiated with the parties has behavioral remedies that, in the Superintendence’s appraisal, are capable of reducing the main entry barriers to the market, such as the prohibition to adopt exclusivity clauses in relation to asset managers, issuers and autonomous investment agents, enabling the development of new competitors. Besides that, Itaú and its nominees at XP will not be allowed to express themselves about the decisions that involve the inclusion or exclusion of business partners in the XP platform, as well as sensitive commercial issues.

In the opinion, the General Superintendence highlights that, if Itaú acquires the control of XP, the transaction must be notified to CADE, so that it can be assessed under the scope of Itaú’s unitary control over XP.

The transaction was forwarded to CADE’s Administrative Tribunal, which is responsible for issuing a final decision. The paperwork for the merger was submitted to CADE on 18 July of 2017 and the legal deadline to the authority’s final decision is up to 240 days, which can be extended for 90 more days.