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Brasfrigo and Goiás Verde will pay BRL 3 million for gun jumping

Gun Jumping

The agreement also states that Goiás Verde must refrain from using the brand Jurema within the Brazilian territory for two years.
published: Apr 23, 2015 10:50 AM last modified: May 02, 2016 02:52 PM

On the judgment session of 22 April 2015, the Tribunal of Administrative Council of Economic Defense (CADE) has determined that the companies Brasfrigo Ltda., Brasfrigo S/A, and Goiás Verde Ltda. must pay BRL 3 million for the practice of gun jumping – when the merger transaction is consummated without the previous authorization of the antitrust authority.

CADE understood that there was a gun jumping practice on the merger which deals with the acquisition of assets of Brasfrigo by Goiás Verde, described on the “Assets and Other Adjustments Buy and Sell Contract” signed by the parts in October 2012 (Merger file no. 08700.010394/2014-32).

Through the deal, Goiás Verde acquired the whole industrial plant and brands of Brasfrigo, a company that operated in the market of canned vegetables with the brands Jurema, Jussara, Tomatino, and Terrabela.

The General Superintendence had already reported the occurrence of a premature consummation of the transaction, deciding for its notification, which occurred in December 2014. In last January, the companies signed an Agreement to Preserve Reversibility of the Transaction with CADE. In this agreement, the buyer committed to maintain the productive unit that is the object of the contract fully working as well as the full use, the integrity and the reputation of the brands bough from Brasfrigo.

To Reporting Commissioner Ana Frazão, even if the merger have not generated negative effects on the market, “the absence of notification has prematurely altered the competition conditions and brought illegal benefits to the parties, especially to the buyer, which, than, started to use the assets of Brasfrigo without submitting the transaction to CADE´s previous analysis”.

The consummation of the transaction was proven after the contract signed between the companies was examined by CADE. Furthermore, it was observed, among other aspects, that Goiás Verde was already using the brands bought from Brasfrigo on its website, having even changed the packaging of the products commercialized under the brand Jurema.

The amount of the pecuniary contribution to be paid by the companies, fixed in BRL 3 million, was agreed with CADE trough the Merger Control Agreement (ACC) proposed by the parties. The agreement also states that Goiás Verde must refrain from using the brand Jurema within the Brazilian territory for two years. 

The Commissioner has also asserted in her vote that although the companies perform their activities with a horizontal overlap in six markets – canned corn, canned peas, canned selected vegetables, tomato puree, tomato sauce and tomato pulp – the merger does not present any risk to the competition because of the small concentration resulting from the transaction and the presence of competition on the field. For this reason, the merger was approved without any restriction.

“Different than what usually occurs on Merger Control Agreements (ACCs) approved by the Tribunal, the parties proposal does not suggest any remedies to fix possible anticompetitive effects derived from the transaction, since there are not any competitive concerns regarding the market structure due to the deal closed between Goiás Verde and Brasfrigo”, Ana Frazão explained.

According to the Commissioner, the negotiated solution on the agreement is sufficient to prevent the parties from reoccurring on the gun jumping practice. In addition, it shows the market the seriousness of the illicit act.