CADE clears joint venture for the development of sustainability measurement software

On 21 June, the Administrative Council for Economic Defense (CADE) approved, without restrictions, the formation of a joint venture between SustainIt, Cargill Incorporated, Louis Dreyfus Company, and ADM International SARL. The joint venture is to develop and operate software to standardise sustainability measurement in the food and agricultural supply chain.

Through the transaction, each company will have a 25% stake in the ownership of the technological solutions platform. The software will consist mainly of standardising sustainability measurements of agricultural and food products—based on information provided by suppliers—as well as disseminating, aggregating, and comparing sustainability performance for the benefit of its customers.

According to Commissioner Sérgio Ravagnani, rapporteur of the case, the possible exchange of competitively sensitive information belonging to platform users and the joint venture partners themselves raised competition concerns. However, the risks of using such information to obtain competitive advantages are mitigated due to commitments set forth by the companies through contractual instruments and the Antitrust Protocol. The document, drafted and proposed by the companies, presents guidelines observing compliance with legal rules.

"When analysing the commitments and guarantees assumed by the applicants through the contractual instruments and the Antitrust Protocol, I understood it is enough to mitigate the competition concerns related to the exchange of sensitive information and its use to obtain competitive advantages, excluding or harming competitors. We will not need a trustee to monitor these commitments," explained Ravagnani.

The Office of the Superintendent-General of CADE approved the merger last March, but Commissioner Victor Oliveira Fernandes requested the case for review by the Administrative Tribunal in April.

At the end of the vote, the president of CADE, Alexandre Cordeiro, highlighted the relevance of the case—a discussion held around the globe that goes beyond the objectives of competition law. In this sense, President Cordeiro mentioned that it is necessary to consider several values at all times. Among them, he highlighted sovereignty, sustainability, consumer protection, gender equality, labour rights, and economic efficiencies. He defends that even though those values are absurdly relevant for Brazilian society, CADE does not have the authority to weigh such values against competitive effects as it would be trespassing on the competencies of other Brazilian institutions.

"When we discuss competition law objectives, which has an orthodox analysis, it is precisely to place our competence within a frame in which it can be technically discussed […],” he said. According to the president, there is a global trend that unsolved issues by other institutions are the responsibility of competition law and antitrust authority. “[...] we must pay attention to avoid overextending our competence [...]. In my opinion, this case is not a case of weighing competition and sustainability as we are clearing this operation because there are no competition issues,” he summarised.