The Brazilian antitrust watchdog’s General Superintendence (GS) division has recommended the disapproval of the transaction between the state-owned energy company and the subsidiary of Ultrapar Participações, a Brazilian industrial conglomerate.
Reuters has reported that GS had come to a conclusion that the sale of Liquigas Distribuidora would create a new player with potentially unfair regional market power that would not be easy to balance out through divestitures.
According to GS, the transaction would remove one of the four main players in the market having a market share of 85% and thereby creating possible situation for price collusion.
The analysis from GS will be put forward in the CADE court in the coming days to decide on the fate of the transaction. It is not necessary that the court will be bound by the technical opinion of GS.
The CADE court is expected not only to evaluate the case but also to mark possible conditions to address the competition concerns.
Both Petrobras and Ultragaz are of the opinion that they can solve the competition worries listed out by the GS by executing certain initiatives. The companies stated that they will continue to work with CADE for the approval of the Liquigas Distribuidora transaction.
For Petrobras, the divestiture of its LPG distribution unit is in accordance with its plan to cut its debt of about $130bn through a large asset divestiture program.
