CADE clears merger of Petz and Cobasi

On 2 June, the Office of the Superintendent General at CADE cleared the merger between Cobasi and Petz.

The companies involved in the transaction mainly operate in the pet care products retail sector (physical and online stores), such as dry and wet food, treats, medicines, products for grooming, and accessories. Additionally, the companies provide pet care services, like veterinarians and pet grooming care, besides sale of flowers, plants, small pets, among others. Petz operates as a manufacturer and wholesale of pet care products, like hygienic pet mats, dry and wet food, treats, as well as accessories for pets.

Following the discovery phase, CADE noted that in the pet care retail market and in the wholesale market of flowers, plants, and small pets, the merger does not harm competition. The two companies have no significant presence in these markets and the transaction will not change it.

In relation to the pet care products retail sector, CADE's analysis indicated that the merger has potential to increase market concentration in some regions. Despite the deal, the authority identified that these markets have an ease of entry, a wide diversity, and a large number of competitors. This scenario reinforces the assessment that the parties involved will not interfere negatively in market conditions, such as prices, supply, or quality, at risk of losing market share to other players in the sector.

The analysis identified that the pet care products market is known for a diversity of players, business models, and sizes, with no consolidated dominant business model. Large stores, marketplaces, supermarkets, farm shops, and smaller pet stores are able to put enough competitive pressure to limit any possible abuse of market power by the merging parties. Smaller businesses stand out for their personalised services and low cost structures, while bigger firms operate with scale gains, offering more convenient and comfortable utilities. Moreover, consolidated marketplaces in Brazil increase the access of micro and small businesses to the market.

CADE found that the pet care retail market is more dynamic in physical stores, with a big number of entries and exits of various players, showing evidence of low entry and exit barriers, characteristics that would prevent the abuse of market power by Cobasi and Petz in a post-transaction scenario. The pet care market is booming, with the turnover of several business models rising at rates significantly above inflation in recent years.

Given the analysis, CADE decided to clear the transaction unconditionally.