CADE clears, subject to remedies, the acquisition of the hydraulic solutions businesses of Eaton by Danfoss

In the hearing of this Wednesday (12 May), the Administrative Council for Economic Defense (CADE) cleared, subject to remedies, the acquisition of the hydraulic solutions businesses of Eaton Corporation by Danfoss. The clearance was restricted to the signing of an agreement to remedy competition concerns derived by the transaction.

Danfoss is a multinational enterprise based in Nordborg (Denmark) that operates in the manufacture of components and engineering technology for refrigeration, heating, motor controls and hydraulic for off-road mobile machines. Eaton, on the other hand, is a multinational enterprise based in Dublin (Ireland). The Eaton Hydraulics department is based mainly in the USA and operates in the manufacture and sale of components and hydraulic systems for industrial and mobile equipments.

According to the vote of the rapporteur of the case, commissioner Lenisa Prado, the transaction, as reported to CADE, had the potential to result in the exercise of market power on the part of Danfoss. Besides, the investigation carried out showed that, in a post-merger scenario, there would be insufficient rivalry conditions in the reviewed markets (such as the markets of piston pump and hydraulic steering units). Therefore, the companies signed an agreement with CADE to ensure effective competition in those markets.

In the view of the rapporteur commissioner, the proposed solutions are sufficient to remedy competition concerns. She stated that "the requirements are in line with the guidelines of the Guide for Antirust Remedies of CADE, as well as with the principles of proportionality, timeliness, feasibility and verifiability, which are applied by this Agency."

International cooperation

The merger between Eaton and Danfoss was also notified to the United States, the European Union, Ukraine, Egypt, China, South Korea, Mexico, Australia and Turkey.

Considering some characteristics of the market at issue, CADE established a dialogue with some antitrust authorities, aiming a consistency amongst reviews. The discussions aimed to avoid determining remedies that excessively encumber the companies involved in the case, but that, at the same time, maintain balance with foreign authorities' opinions, comply with the specificities of the Brazilian market and seek to preserve the effectiveness of the negotiated remedy.

"We understand that the proposed remedies are consistent and in accordance with the opinions of foreigner authorities, in addition to being compliant with specific concerns in the Brazilian market," completed commissioner Lenisa Prado.

The Tribunal of CADE understood the rapporteur's view and decided to clear the transaction subject to fulfilling the obligations set on the agreement.

Access the Merger no. 08700.003307/2020-39.