CADE unconditionally clears joint venture among companies in the market of Liquefied Petroleum Gas (LPG)

On 21 February, the Administrative Council for Economic Defense (CADE) unconditionally cleared the joint venture among three companies of the Liquefied Petroleum Gas (LPG) sector. The Office of the Superintendent General of CADE approved the merger in October, 2023. However, after the appeal of a third party, the Tribunal requested a merger review. Commissioner Diogo Thomson reported the case and the Tribunal dismissed the appeal unanimously. 

The companies Oiltanking, Queiroz Participações, and Copa Energia are to join forces to make a new business for the storage of LPG in the terminal of Porto de Suape, in Ipojuca, in the state of Pernambuco.     

The new business will have a storage capacity of around 120 thousand m³ and a significant storage capacity for gas cooling. According to the parties, as soon as the transaction is completed, the customers will be able to import the input directly and with more agility, operational security, and technology. 

The applicants claim that the new terminal of LPG is an alternative to tanker ship importation, which is to expand the supply of gas in the region. The companies also state that the transaction is to benefit the Northeast region of Brazil since there is a dependence on the supply of LPG importations, which is currently carried out by Petrobras’ tanker ships.   

The Office of the Superintendent General of CADE analysed the alleged violations. However, there was no evidence of horizontal overlaps or market foreclosure.  

According to Commissioner Diogo Thomson, the rapporteur of the case, the merger will not affect the market. “I tried to bring elements to demonstrate that—even in aworst-case scenario, one that is to come and uncertain—there are several factors that mitigate the capacity and incentives for market foreclosure through the vertical integration resulting from the joint venture”, he stated.  

Mr Thomson also mentioned that even in narrower relevant market scenarios, the transaction is pro-competitive. In a worst-case scenario, considering a hypothetical withdrawal of tanker ships and the exclusion of Bahia as part of the relevant market of distribution in the Brazilian Northeast, in the least, the transaction is not to alter the import capacity of the appellants, which is enough to meet the demand in the region and also of third parties.  

Commissioner Gustavo Augusto highlighted that the transaction represents the competition entry in the market, increasing the productive capacity, which does not raise competition concerns. 

Access Merger no.08700.003437/2023-14.