Cade’s Superintendence renders opinion on Kroton-Anhanguera merger

The General-Superintendence of the Council for Economic Defense – Cade rendered an opinion, published on this Wednesday’s (04) Offical Journal, sending the merger between Anhanguera Educacional Participações S/A and Kroton Educacional S/A (AC 08700.005447/2013-12) to the Council’s Tribunal, for the evaluation of eventual restrictions to the transaction.

In the Superintendence’s view, the association agreement between the companies, notified under Law 12.529/11, does not raise concerns regarding certain courses and locations, but does implicate substantial concentrations in some higher education markets. In the regular undergrad market, competition concerns were identified in three Brazilian cities. Regarding the distance learning undergrad market, problems were raised in courses both in national and local levels, in over 50 municipalities.

According to the opinion, rival institutions would not be able to offer enough competition in these markets, since Kroton and Anhanguera hold important advantages in terms of attracting students, scale, course catalog, capillarity of institutions and teaching stations, prices, marketing and other variables.

The Superintendence considered that the merger, if approved without restrictions, could harm students in the affected courses and locations, through higher prices, less services and lower quality of education.

In order to avoid the identified anticompetitive effects, the Superintendence recommended to Cade’s Tribunal, responsible for the final decision, that the merger’s approval be subject to competition remedies. The eventual restrictions will be established by the Tribunal, which may apply them, if needed, unilaterally or through an agreement with the merging parties.

Upon the reception of the merger by the Tribunal, the case was assigned to Commissioner Ana Frazão, which will be responsible for reporting the case and bringing it to trial by the Council.