CADE clears American Airlines’ stake acquisition in Azul subject to Merger Control Agreement

On 7 October, the Administrative Council for Economic Defense (CADE) cleared American Airlines’ acquisition of an approximately 8% minority stake in Azul S.A., subject to the signing of a Merger Control Agreement. The deal involves a USD 100 million investment as part of Azul’s financial restructuring under Chapter 11 of the US Bankruptcy Code.

During the Tribunal’s review, further information was collected throughout the agreement negotiations, considering the transaction’s timing constraints and Azul’s financial restructuring. The applicants cooperated by providing information and helping develop the safeguards necessary for clearance.

The case matters both for the airline industry and routes between Brazil and the United States. It also advances the competition law debate on minority shareholdings between competitors. The vote of Commissioner Camila Cabral Pires Alves, rapporteur of the case, considers effects related to changes to the companies’ economic interests, changes to governance rights, and access to competitively sensitive information. It also analyses whether reduced strategic uncertainty, aligned incentives, conditions that could sustain coordination, and networks of ownership and commercial ties could make it more likely that the markets concerned coordinate.

“Minority shareholdings can affect competition in different ways,” said the case rapporteur. “We need to understand the economic interest the investment creates, the influence rights attached to the stake, how information flows, and how these links fit into the way the companies compete.”

The vote draws on CADE’s Horizontal Merger Guidelines and highlights areas for further work on assessing partial acquisitions and coordinated effects, particularly the distinction between the ability to influence a competitor and the economic incentives arising from a shareholding, which may exist even without exercising control. The analysis is also relevant to the ongoing public consultation on the review of CADE Resolution 33, especially its treatment of minority acquisitions and gradual changes to influence rights and ownership structures.

The commissioner’s vote examined two theories of harm to competition: the first considered whether the financial stake and the rights associated with the investment could weaken competition between American and Azul through three

distinct channels: the internalisation of a portion of Azul’s financial returns, governance rights, and access to strategic information.

The Tribunal concluded that American’s approximately 8% stake results in limited internalisation of Azul’s financial returns and that the governance rights do not give American the power to veto strategic decisions or unilaterally determine Azul’s commercial policy. The main competition concern was the potential access to forward-looking, non-public information on prices, capacity, flight frequencies, route networks, expansion, costs, profitability, and commercial planning, among other strategic variables. Access to such information could reduce competitive uncertainty, allow a competitor to anticipate its rival’s commercial decisions, and weaken incentives to pursue independent competitive strategies.

The second theory examined allegations that the transaction could increase the likelihood of coordination among airlines operating on Brazil–US routes, taking into account American’s and United’s shareholdings in Azul, the network of commercial relationships, between the three competing airlines, and potential, channels, for sharing strategic information.

The Tribunal concluded that the new ownership structure increases ownership and commercial ties between competitors and could lead to greater market transparency and strategic interdependence. However, the available evidence does not establish that the transaction would make sustainable market-wide coordination likely, given the differences between routes, the absence of joint control or veto rights, and the presence of independent competitors capable of responding or expanding their services. Therefore, the analysis distinguished between an increase in factors that could facilitate coordination and evidence that competitors would actually be able to establish, monitor, and sustain a coordinated strategy.

The identified residual risks were addressed through an agreement designed to make safeguards, most of which were originally established in private legal instruments, directly enforceable by CADE, while introducing additional mechanisms for transparency, monitoring, and oversight.

“The agreement makes the safeguards stronger, easier to verify, and directly enforceable by CADE. This approach addresses the identified risks without imposing restrictions beyond those needed to protect competition”, the rapporteur said.

The agreement is structured in three pillars: (i) governance rules and safeguards designed to preserve the companies’ competitive independence, restrict access to and the sharing of competitively sensitive information, and prevent the exercise of influence over Azul’s strategic and commercial decisions, particularly in markets where its operations overlap with those of American Airlines; (ii) mechanisms to monitor American’s future acquisitions of shareholdings in airlines operating regular services between Brazil and the United States, including transactions not subject to mandatory notification, enabling CADE to assess potential changes to the network of ownership links between competitors, in line with ongoing discussions on the review of CADE Resolution 33; and (iii) reporting

obligations concerning changes to American’s voting rights, powers to exert influence, and representation in Azul’s governance, allowing CADE to monitor subsequent changes to the incentive and governance structure assessed in the decision. Through reporting requirements, oversight mechanisms, and a dedicated sanctions regime, the agreement seeks to mitigate the identified risks proportionately while preserving the transaction’s economic rationale.

Therefore, the transaction was conditionally approved, subject to the signing and full compliance with the Merger Control Agreement.
Access Case No. 08700.003120/2026-21