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CADE’s Superintendence concludes opinion on transaction between Continental and Veyance

Merger

The merger will be analyzed by CADE’s Tribunal
published: Dec 08, 2014 10:00 AM last modified: May 02, 2016 02:50 PM
In an order published in the Federal Gazette on Friday (5/12), the General Superintendence of the Administrative Council for Economic Defense – CADE sent for analysis, by CADE’s Tribunal, the acquisition, by Continental Aktiengesellschaft, of the control of Veyance Techonologies. The Companies involved are manufacturers of automotive parts, rubber products, hoses, industrial equipment, and other products.

After studies and consultations to the market, the Superintendence found that the transaction (Merger File 08700.004185 / 2014-50) has the potential to generate market power exercise in the segments of steel cord conveyor belts (used in mining, steel and construction) and pneumatic springs (used as components of the heavy load vehicle suspension system).

According to the opinion, imports of these inputs would not be able to reduce the market power risk of the companies. The data collected indicates that the entry of new players in the market is unlikely in the coming years. In addition, the remaining rivalry in these segments was not sufficient to resolve any competition problems arising from the operation, such as increase on product prices.

As a result, the General Superintendence challenged the merger before CADE’s Tribunal, which will be responsible for a final decision on the approval, block or adoption of eventual remedies to address the identified competition concerns. The Tribunal’s resolutions can be applied unilaterally or by agreement with the parties.

With the conclusion of the analysis by the Superintendence, the acquisition of Veyance by Continental will be distributed to a Commissioner, who will be responsible for the reportage of the operation and subsequently lead it to judgment. The merger was notified on 20 May this year and the legal deadline for the final decision of Cade is 240 days, extendable for another 90 days.