CADE conditionally clears acquisition of Elastikos by Sintokogio

On 30 September, the Administrative Council for Economic Defense (CADE) cleared, the acquisition of Elastikos (France) S.A.S. by Sintokogio, LTD., listed on Tokyo stock exchange, upon the signing of a merger control agreement.

The transaction involved the transfer of Winoa S.A. control, alongside its subsidiaries, including Winoa Brasil Indústria e Comércio Ltda., which manufactures steel abrasives and surface treatment tools and services.

CADE eventually determined that the transaction should be formally notified, based on Article 88, Paragraph 7 of Law 12529/2011. Initially, it had not been subject to mandatory notification.

According to the Office of the Superintendent General at CADE (SG), significant concerns were identified in the domestic market for steel shots, a segment of steel abrasives in which there were low levels of imports, barriers to entry, and no strong rivals. Therefore, conditional clearance was recommended, subject to the execution of a merger control agreement.

The agreement signed between the applicants and CADE established structural and behavioural remedies. The highlights are the divestiture of the asset responsible for the main stage of manufacturing steel abrasives, melting of steel scrap, accompanied by a contingency mechanism for demobilisation, as well as the obligation not to resume production for a ten-year period, in addition to specific prohibitions during the term of the remedy.

According to Commissioner Diogo Thomson, rapporteur of the case, the remedies agreed upon were essential to mitigate the risks of market power and ensure conditions of rivalry in the sector, benefiting consumers and the competitive environment. “This case highlights the importance of CADE’s preventive role in concentrated markets," he stated.

Access Case no. 08700.007319/2024-66