CADE’s General Superintendence renders opinion on BRF/Minerva merger

The General Superintendence of the Administrative Council for Economic Defense – CADE referred to the Tribunal’s analysis the acquisition by Minerva S/A of bovine slaughtering units of BRF S/A located in the cities of Várzea Grande and Mirassol D’Oeste, in the state of Mato Grosso (Merger file no. 08700.000658/2014-40). As part of the payment, the transaction foresees the transfer of 16.3% of Minerva’s shares to BRF, after capital increase.

The Superintendence’s assessment stated that the transfer of bovine slaughtering units aimed by the merger would make Minerva one of the strongest actors in the bovine fresh meat market, with better conditions to compete with this segment’s leaders. In this perspective, the transaction would be potentially pro-competitive.

On the other side, the potential coordination between the processed food businesses of the two companies, which could derive from the minority entrance of BRF in Minerva’s capital, generates competition concerns according to the Superintendence’s opinion. In the healthy cold cuts, processed chicken products, kibbeh and meatballs markets, for example, the conjoint participation of the companies were high, especially due to the already relevant presence of BRF in these segments.

Due to this anticompetitive potentiality, the Superintendence challenged the merger before CADE’s Tribunal. The opinion that refers the case recommends the analysis of possible remedies in order to solve the anticompetitive effects of the transaction, preferably preserving, if possible, “the expected benefits in the bovine fresh meat market”.

The Tribunal is responsible for the final decision on the approval, blockage or the adoption of remedies to solve the competitive problems identified. The Tribunal’s decision can be applied unilaterally or by an agreement with the parties.

After the General Superintendence’s opinion, the case will be assigned to a Reporting Commissioner, who will be responsible for the analysis and presentation to the Administrative Tribunal.

The merger was filed in 27 January 2014, the legal deadline to render a final decision is 240 days, extendable for 90 more.