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The General Superintendence of CADE concludes report on joint venture between Itaú Unibanco and MasterCard

Merger

The transaction will be analyzed by CADE´s Tribunal
published: Jan 26, 2016 10:00 AM last modified: May 02, 2016 02:42 PM

The General Superintendence of the Administrative Council for Economic Defence - CADE, in a decision published in the Official Gazette on Monday (25/01), submitted to the Tribunal the case related to the joint venture proposal between Itaú Unibanco S/A and MasterCard Brasil Soluções de Pagamento Ltda., to launch a new credit and debit card brand in the Brazilian market (AC 08700.009363/2015-10).

Itaú Unibanco operates in the market of credit and debit card issuance and merchant acquirer – through Rede, a certifier controlled by Itau. These markets are vertically integrated with the payment cards market, in which the new band would operate, therefore, the transaction entails a vertical integration between the joint venture and the markets of issuance and merchant acquirer.

According to the parties, the transaction aims to launch a new card brand in the Brazilian market, facilitating the introduction of new technologies in the payment cards market, and promoting financial inclusion through the introduction of new products that will respond better to the needs of the Brazilian consumer.

After consulting other players in the market, including card issuers, brands and merchant acquirers, the General Superintendence found that the transaction could lead to discriminating strategies against rival merchant acquires. Itaú Unibanco could favor Rede with exclusivity of the new brand or raise rival´s costs, making the new band less attractive for Rede´s competitiors.

According to the Superintendence , the concerns raised by competitors had reasonable grounds since Itaú Unibanco would have high influence over strategic decisions of the joint venture. Moreover, CADE´s analysis showed that there is a possibility that Itaú Unibanco could transfer its MasterCard client base to the new band, which would enhance the competition concerns resulting from the transaction.

After concluding that the approval of the transaction, as it was presented, could result in anticompetitive conducts by Itau Unibanco against rival merchant acquires, the General Superintendence challenged the transaction before the Tribunal, which will be responsible for the final decision about the approval, disapproval or the adoption of remedies that may solve the concerns. The determinations of the Tribunal may be applied unilaterally or through agreement with the parties.

 The transaction was notified on September 2015, and the analysis has taken 124 days. The legal term for the final decision of CADE is of 240 days, which can be extended for 90 days more.