13/02/2025
On December 24, CADE’s General Superintendence (“SG/CADE”) approved, without restrictions, a transaction consisting of the rebalancing of participation among Assuruá 5, Cargill Agrícola and Cargill Alimentos, in the consortium in which they are part of. The formation of the consortium was approved without restrictions by the SG/CADE in July 2023, for the implementation of a wind power generation project.
With the restructuring of the participation within the consortium, Cargill Group will have access to a larger portion of electricity for consumption under the self-production regime.
The parties argued that the restructuring should not be subject to review, since it would not fit into any of the hypotheses of a notifiable transaction under the terms of article 90 of the Brazilian Competition Law. According to the parties involved, the transaction is a mere internal rebalancing of the representativeness of each part in the consortium based on their contributions, obligations and rights, and does not involve the increase in the participation nor the acquisition of “part of a company”, as the law requires.
The SG/CADE, however, made an analogy between consortium and company to apply article 9, item II (which defines the rule for submission of minority participations), and article 10, item II, paragraph “b”, (which defines the minimum percentage of participation acquired to be submitted) of CADE Resolution No. 33/2022. Based on these articles, the authority ruled on the need to notify the authority of increases of 5% or more in the participation in a consortium, if “the invested company is a competitor or operates in a vertically related market“.
The decision states that “changes in consortium contracts are subject to mandatory notification, so that the increase in participation or representativeness in the consortium is equivalent, by analogy, to an increase in shareholding in a company, with the potential to change market conditions“. For CADE, as the increase of Cargill Group’s participation in the consortium was greater than 5%, it falls under item b, item II of article 10 of the mentioned Resolution, and therefore, notification is required.
This equivalence between consortium and company for the purposes of notification of consortium restructuring changes the analysis of this type of arrangement, as it is easier for consortium members to enter and exit the consortium than it happens in companies. The decision now guides the notification in these types of cases.
The Competitionteam of L.O. Baptista Advogados is available to clarify any doubts.
Co-authored by: Patricia Agra Araujo, João Pedro Marques de Gracia Borges e Laura Oliveira
