CADE challenges Knauf's acquisition of Trevo

The Office of the Superintendent General of CADE (SG/CADE) submitted for review  the acquisition by Knauf Brazil of a drywall manufacturing plant of the company Trevo Industrial de Acartonados.

The gypsum drywall is made in an industrial process using gypsum ore, water aggregate, additives, and paperboard applied to both sides of the walls. In Brazil, the product is increasingly used in construction, especially in commercial buildings. Drywalls are used for faster construction, as they offer more flexibility in reconfiguring environments and carrying out maintenance on ducts and wiring affixed to walls or ceilings.

After the investigation, the SG noted that the Brazilian drywall market currently has only four suppliers, including Knauf and Trevo. In recent years, there have been no other new competitors despite the growing market of drywalls.Therefore, there is no competition in terms of pricing nor frequent changes in market position. The transaction between the two companies would increase market concentration, exceeding the limits set out in the guides of CADE and the competition law.

The review also pointed out that importations are unusual and cannot be considered a source of competition if Knauf raises the prices after merging with Trevo. According to the Office of the Superintendent General, other factors could lead to collusion, such as the fact that the product is homogeneous and uses similar manufacturing technology as well as the lack of history of competitive rivalry in terms of price, quality, or any other difference amongst the products.

The Office of the Superintendent General understands that the entry conditions, the competitive rivalry, and the efficiencies presented are not enough to mitigate the likely anticompetitive effects of the acquisition in the market. Thus, the SG challenged the case and submitted it to the Tribunal. In the Tribunal, a commissioner will review it and include it in the agenda for adjudication.

Access Case nº. 08700.003198/2023-01.