CADE reforms interim measure against CA Investment in Eldorado

On 19 March, the Administrative Council for Economic Defense (CADE) ruled on the appeal filed by CA Investment (Brazil) S.A against an interim measure imposed after an investigation of alleged conducts to hinder the operation of a competitor, related to the exercise of CA Investment's political rights in Eldorado Brasil Celulose S.A. (Eldorado).

The Office of the Superintendent General at CADE (SG) launched an investigation after Eldorado claimed CA Investment used voting and veto power, as a minority shareholder, to obstruct the company’s operation. CA Investment, part of the Paper Excellence Group and the J&F Investimentos S.A., controlling shareholder of Eldorado, are competing to take control of the company.

In November 2024, after launching an administrative proceeding, CADE imposed an interim measure to  suspend the exercise of any CA Investment's political rights on Eldorado.

CA Investment’s appeal against the interim measure was partially granted, as stated in the vote of the rapporteur commissioner Victor Oliveira Fernandes.

The rapporteur acknowledged that the minority participation of CA Investment in Eldorado could enable strategies to increase the competitor’s transaction costs in the pulp market. However, the Tribunal of CADE reformed the interim measure to re-establish all CA Investment’s political rights, except veto powers that could harm the growth of the company’s productive capacity. CADE found evidence that some of CA Investment's veto powers might be used to block the implementation of a second hardwood pulp production line in the municipality of Três Lagoas, in the Brazilian state of Mato Grosso do Sul. The project is expected to have a nominal capacity of 2.3 million tons of pulp per year and is stalled due to corporate disputes related to acquiring the control of the company.

CADE's decision expresses the need to protect the competitive process, avoiding practices that could prevent the expansion of relevant levels of productive capacity, affecting the pulp market.