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General Superintendence concludes opinion on Rumo/ALL transaction

Merger

Merger file will be analyzed by CADE’s Tribunal
published: Dec 10, 2014 11:23 AM last modified: May 03, 2016 04:24 PM

In opinion published on 9 December 2014 in the Official Gazette, the General Superintendence of the Administrative Council for Economic Defense – CADE challenged before the Tribunal the merger between Rumo Logística e Operadora Multimodal S/A and América Latina Logística S/A – ALL (Merger file no. 08700.005719/2014-65).

Rumo operates in the market of multimodal logistic services for sugar export through the Port of Santos. The company is part of the Cosan Group, which acts in the production and distribution of sugar and ethanol for the internal and external markets, among other activities. ALL owns railroad concessions in the states of São Paulo, Paraná, Santa Catarina, Rio Grande do Sul, Mato Grosso, and Mato Grosso do Sul. The area included in the concessions corresponds to approximately 80% of the Brazilian GDP and the railroads serve four of the main Brazilian ports, enabling the production flow of a considerable amount of many agricultural commodities.

With the transaction, Cosan Group will become ALL’s main shareholder. After consulting the market, the Superintendence verified that although it presents possible beneficial effects regarding the extension of the railway capacity, the merger has potential to generate risks such as limitation to access the infrastructure and discriminatory practices in regards to the other users.

Due to this anticompetitive potentiality, the General Superintendence challenged the transaction before CADE’s Tribunal, which is responsible for the final decision on the approval, blockage or adoption of remedies to mitigate the identified competition problems. The Tribunal’s determinations can be applied unilaterally or through an agreement with the parties. The case has been assigned to Reporting Commissioner Gilvandro Araújo.

The merger was filed on 21 July 2014 and the legal deadline for CADE’s final decision is 240 days, extendable for 90 more days.