Brazil’s Council for Economic Defence, CADE, has approved a string of deals that pave the way for two national players capable of competing in global petrochemical market.
On 9 July, the antitrust regulator cleared four transactions that create two vertically integrated petrochemical companies.
“This was a major transaction under which CADE's decision consolidated issues related to the petrochemical market, including the definition of the plastic resins market as global,” says Ubiratan Mattos of Mattos Muriel Kestener, competition counsel to Braskem, Latin America’s biggest petrochemicals group and one of the main actors in the deals.
The deals are part of a government-backed restructuring of Brazil’s petrochemicals sector centred round the breakdown of the Ipiranga Group. Ipiranga, formerly a leading presence in Brazil’s petrochemical and energy distribution industries, has been divided between three Brazilian icons, government-run oil company Petrobras, Braskem, and the Ultra Group, the country’s biggest liquefied petroleum gas distributor. The transaction closed in April and was dependent on CADE’s approval.
“In a 5-to-1 decision, CADE ruled that the transactions do not entail a significant joint market share in the worldwide market for resins, and have pro-competitive effects as they eliminate corporate interlocks which hindered investments and affected the competitiveness of the Brazilian industry,” says Aurélio Marchini Santos of Levy & Salomão Advogados, competition counsel to Petrobras.
Braskem now has a 60 per cent interest in Ipiranga’s petrochemical operations, with the remainder controlled by Petrobras. Petrobras has also transferred some of its petrochemical assets to Braskem, thereby assuming a 30 per cent stake in Braskem.
Meanwhile, Petrobras and Unipar consolidated their petrochemical assets into a new company, Quattor, in which Unipar has a 60 per cent stake, Petrobras takes 31.9 per cent and Petroquisa holds the remainder. Petrobras has also bought another petrochemicals company, Suzano Petroquímica.
Quattor becomes Brazil's second-largest petrochemicals entity, behind Braskem.
According to Santos, CADE’s review raised discussions on the geographic market definition for thermoplastic resins, vertical concerns associated with the supply of ethylene and other feedstock to independent non-vertically integrated competitors, and the possibility of reducing rivalry in view of the minority equity interests held by Petrobras in Braskem and Quattor.
“CADE deemed that the balanced interest held by Petrobras in Braskem and Quattor is essential to ensure a credible commitment on the supply of naphtha to both players,” explains Santos. “The new corporate governance framework designed by the parties neutralises coordination concerns.” Naphtha is used in the petrochemical industry as a feedstock or a solvent.
“We are very happy with the decision,” says Tito Andrade of Machado, Meyer, Sendacz e Opice Advogados, who provided competition advice to Ultra. “Due to its complex corporate structure the deal entailed a number of interesting challenges from an antitrust perspective and I believe that CADE addressed those challenges in a very technical fashion.”
For an in depth report on the breakdown of Ipiranga’s assets read here.
Counsel to the Ultra Group
Partners José Roberto Opice, Celso de Paula F da Costa, Carlos José Rolim de Mello, Raquel Newton Camara, Arthur Bardawil Penteado and associate Tomás Junqueira de Camargo, and partners Tito Amaral de Andrade and Gustavo Noman for competition advice
Wald e Associados AdvogadosPartners Alexandre de Mendonça Wald, Luiza Rangel de Moraes, Mariana Tavares Antunes, Armando Guimarães de Almeida Neto and André de Luizi Correia, and associates Marina Gaensly, Liana Gorberg and Samantha Mendes Longo
Counsel to Braskem
Partners Luiz Antonio de Sampaio Campos and Mauro Teixeira Sampaio, and associates Henrique Beloch, Rafael Calabria and Pedro da Costa
Mattos Muriel Kestener for competition advicePartners Ubiratan Mattos and Maria Cecilia Andrade, and associate Pedro Vicentini
Counsel to Petrobras
In-house counsel – senior attorney Andrea Damiani and junior attorney Elisaura Fernandes da Silva Motta, Fernandes Rocha – Advogados for corporate advicePartners Luiz Leonardo Cantidiano and Oswaldo de Moraes Bastos Sobrinho, and associates Caio Machado Filho and Gustavo Oliveira
Xavier, Bernardes, Bragança, Sociedade de Advogados for tax mattersPartners Alberto Xavier and Roberto Duque Estrada and associate Renata Emery
Levy & Salomão Advogados for competition advicePartners Amadeu Ribeiro and Aurélio Marchini Santos and associate Maria Eugênia Novis
Counsel to Ipiranga and Ipiranga shareholders
Partners Antonio Mendes, Carlos Alberto Moreira Lima Jr and Cristianne Saccab Zarzur, and associates Giancarlo Chamma Matarazzo and Pythagoras Carvalho
Gouvêa Vieira AdvogadosPartners Vitor Rogério da Costa and Pedro Vítor Araújo da Costa
(Latin Lawyer 11.07.2008)
(Notícia na íntegra)
