Superintendence suggests first agreement in a merger case under the new antitrust Law

The General Superintendence of the Administrative Council for Economic Defense – CADE, in a decision published on April 26th, recommended the sale of assets of an industrial unit of Ahlstrom Corporation as a requisite for the approval of the operation in which Ahlstrom merges its business with Munksjö AB in the special papers market. CADE was notified of the operation between the European companies in November, 2012.

The sale of assets is part of a Merger Control Agreement (ACC, for its acronym in Portuguese). This is the first agreement in a merger case presented under the new antitrust law (Law 12.529/11). The signing of the Agreement, however, still depends on the approval of Cade’s Tribunal. Under the former legislation (Law 8.884/94), this type of arrangement was conducted through Performance Agreements (TCD, for its acronym in Portuguese).

The General Superintendence’s official opinion stated that the operation, originally, could implicate a high degree of concentration in the pre-impregnated decorative paper - PRIP market (used in furniture indoors as kitchens, bedrooms and offices), and in the heavy weight abrasive paper backings market (used for the manufacture of abrasive coating, which are used to polish materials in many industrial operations), since there are not any prospects of new entrants in the sector nor any rivals sufficiently able to compete in these markets.

To address such competitive concerns, Munksjö and Ahlstrom have proposed to CADE, in form of an ACC, the sale of Ahlstrom’s assets currently used in the production of PRIP and abrasive paper backings to a third partie.

The General Superintendence recommended the approval of the ACC, which will now be analyzed by the Tribunal, responsible for rendering the final decision. Under the new law, all merger cases in which the Superintendence recommends restrictions or agreements must be reviewed by the Council’s Administrative Tribunal.