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COMPETITION LAW IN BRAZIL: 2018 OVERVIEW 19

impair the effectiveness of the divestiture, and required AFTER A LONG REVIEW
“upfront buyer” commitments (meaning that parties AT THE TRIBUNAL LEVEL,
can only consummate the original transaction after CADE DECIDED TO CLEAR
submitting binding agreements with acquirers of the THE MERGER CONDITIONED
divested assets). Furthermore, potential acquirers had ON DIVESTITURES. THIS
to meet high thresholds in terms of financial capacity IS THE ONLY CASE IN
and know-how in the respective industries. Finally, CADE’S HISTORY TO HAVE A
Commissioners were extremely careful in selecting RECOMMENDATION BY THE
valuable assets that could effectively allow entry or SG TO BLOCK THE DEAL THAT
consolidation of rivals. WAS NOT UPHELD BY THE
This approach towards a more careful TRIBUNAL. THIS IS QUITE
tailoring of remedies was later consolidated with other SIGNIFICANT BECAUSE IT
matters that followed similar standards. REVERSED A NEGATIVE TREND
OF CADE BLOCKING COMPLEX
DEALS; BEFORE THIS MATTER,
ArcelorMittal’s acquisition of Votorantim CADE HAD RECENTLY
Siderurgia: analysis of the long steel market BLOCKED TWO PREVIOUS
and structural remedies CASES, GENERATING LOTS
OF UNCERTAINTY AS TO THE
In February, CADE’s Tribunal ROLE OF MERGER REVIEW
approved ArcelorMittal’s acquisition of its competitor IN BRAZIL.
Votorantim Siderurgia conditioned on divestitures . The
1
majority vote was delivered by Commissioner Polyanna Vilanova. Commissioners Cristiane
Alkmin and João Paulo de Resende dissented and voted to block the deal.
This was one of the most complex merger investigations in 2018. It generated
significant horizontal overlaps in the long steel industry, being initially seen as three-to-two
merger in a mature industry with high barriers of entry. CADE’s Superintendence conducted
a very detailed investigation and recommended the blocking of the merger under a theory of
increased unilateral and coordinated effects.
After a long review at the Tribunal level, CADE decided to clear the merger
conditioned on divestitures. This is the only case in CADE’s history to have a recommendation by
the SG to block the deal that was not upheld by the Tribunal. This is quite significant because it
reversed a negative trend of CADE blocking complex deals; before this matter, CADE had recently
blocked two previous cases, generating lots of uncertainty as to the role of merger review in Brazil.
The Tribunal held that the deal raised antitrust concerns related to production
and sale of common long steelw products, including: rebar; light profiles; medium profiles;

1 See Merger Review No. 08700.002165/2017-97.
We represented ArcelorMittal in this matter.
Any opinions and views expressed here are our
own and do not represent our client’s position
in the case.