CADE suggests clearance of acquisition of Marfrig’s assets by Minerva

The Office of the Superintendent General of CADE (SG/CADE) submitted the case to the Tribunal of CADE. The transaction involves the acquisition of part of the beef and sheep market of Marfrig Global Foods S.A. and Marfrig Chile S.A. (MARFRIG) in South America by Minerva S. A. (MINERVA)The analysis includes production plants of slaughter and deboning of cattle and sheep and a distribution centre in Brazil, Argentina, and Chile.

The acquisition comprises horizontal overlaps in the markets of: (1) slaughter and deboning of cattle in the Brazilian states of Goiás, Mato Grosso, and Rondônia; (2) Brazilian commercialisation of fresh beef; (3) Brazilian by-products of cattle culling; (4) Brazilian commercialisation of fresh sheep meat; (5) Brazilian rawhide market. Furthermore, the transaction results in a vertical integration between slaughter and deboning of beef and meat processing by Minerva.

The discovery phase concluded that the horizontal overlaps and vertical integrations cause no potential harm to the competitive environment. However, the restrictions previously settled in non-compete clauses are not in accordance with CADE’s case law, raising competition concerns.

Thus, the SG/CADE settled a new non-compete clause meeting new parameters, according to CADE’s case law. In this regard, the applicants proposed a merger control agreement to ensure the preservation of the new non-compete clause terms up to the cease of its effects.

The new non-compete clause protects the investment made by the acquirer in the transaction and does not prevent the selling company from operating in the relevant markets that are not affected by the acquisition.

Therefore, the SG/CADE considered this alternative as a solution to potential harm to the competitive environment, recommending the signing of a merger control agreement.

According to the Brazilian Competition Law, for cases with conditionally cleared acquisitions, the SG/CADE is to file the transaction to the Tribunal of CADE, and then a Rapporteur is to consider the proposal. The Tribunal of CADE is to ratify the merger control agreement.

The Companies - MINERVA is a Brazilian company which produces and commercialises fresh beef and by-products, cattle export, and processed animal protein. Therefore, the business runs facilities to slaughter and deboning of bovines that are exported globally.

MARFRIG is a Brazilian multinational company in the food sector, especially in the fresh beef market. The company is part of MARFRIG S.A., which operates facilities for slaughter and deboning of bovines in Brazil, Uruguay, and Argentina, and sheep in Chile, and produces processed food.