CADE decides not to process the transaction involving Upfield and BRF

In the hearing that happened this Wednesday (14 April), the Tribunal of the Administrative Council for Economic Defense (CADE) decided not to process the partnership agreement between the firms Upfield and BRF. The transaction regards the licensing to BRF of the exclusive use of the Becel brand in Brazil for the production and distribution of margarine for the term of 12 months, without provision for renewal.

The issue was submitted to the Tribunal of CADE over an appeal by Seara, an interested third party in the case, against the opinion of the Office of the Superintendent General of CADE which favoured not processing the transaction since it did not meet all the requirements for reporting a partnership agreement to CADE.

According to the vote of the rapporteur of the case, Commissioner Mauricio Oscar Bandeira Maia, the review of the case provided that the transaction is defined as a partnership agreement, taking into consideration its characteristics of establishing a joint venture for a common purpose, the sharing of risks and results between the two enterprises, and that the two firms are rivals in the Brazilian market of margarine. "Thus, for notification to CADE, all requirements foreseen in Resolution 17/2016 must be fulfilled," he stated.

For the rapporteur commissioner, since the transaction involves a contract duration of only 12 months, it does not meet the time requirement established by Article 2 of the head provision of said Resolution, which mentions a contract duration equal or superior to two years. Therefore, the opinion of the SG for not processing the case is appropriate.

Additionally, the rapporteur commissioner dismissed the request for launching an Administrative Procedure for Merger Review (APAC in its acronym in Portuguese) to the detriment of the firms. As stated by Bandeira Maia, once the transaction is not considered as of mandatory notification, its completion before CADE has finished its assessment is not harmful to competition.

The Tribunal of CADE understood the rapporteur's view, which dismissed the third party appeal and upheld the opinion of the Office of the Superintendent General not to process the case.

Access Merger Case no. 08700.003855/2020-69