CADE’s Superintendence concludes the opinion regarding the operation between BRASKEM and SOLVAY

The General Superintendence of the Administrative Council for Economic Defense – CADE, referred to the Tribunal’s analysis the acquisition by Braskem S/A of 70,59% of the assets of Solvay Indupa S.A.I.C., also known as Solvay Indupa Argentina. With the transaction, Braskem will hold 99,99% of Solvay Indupa Brasil, which belongs to Solvay Indupa S.A.I.C. (Merger no. 08700.000436/2014-27).

The Superintendence evaluated that the merger would create a monopoly of Braskem in the markets of PVC-S and PVC-E, used mainly in the construction sector. The transaction would also raise the concentration in the market of caustic soda, used by paper and cellulose, metallurgy and petrochemical industries, which would be divided among only three strong competitors in the country.  

After studies and market consultation, the Superintendence concluded that the import of these products would not offer enough rivalry to the ones commercialized in Brazil, since this alternative presents many competitive disadvantages, such as longer delivery periods and higher costs (import tax rates, transportation costs, insurance, customs, logistic and storage expenses). Still, according to the Superintendence, the current import level is mainly due to a deficit of the national productive capacity, and not necessarily to the competitiveness of the international product compared to the national.

Furthermore, an analysis made by CADE’s Department of Economic Studies pointed the possibility of significant increase of prices by Braskem after the transaction, before the imports were even considered a good economic alternative by the consumer companies of the analyzed products.

Due to the potential anticompetitive effects, the General Superintendence challenged the merger before CADE’s Tribunal, which is responsible for the final decision on the approval, blockage or adoption of eventual remedies to solve any problems to problems pointed. The determinations of the Tribunal can be applied unilaterally or by agreement with the parties.

With the conclusion of the analysis by the Superintendence, the transaction will be assigned to a Reporting Commissioner, who will be responsible for analyzing and subsequently presenting it to the Administrative Tribunal for judgment.

The Merger was notified on 20 January 2014. The legal term to render a final decision is 240 days, extendable for another 90 days.