Cade endorsement sparks controversy in union of gas companies – 06/06/2023 – Panel SA

Advisors from Cade (Administrative Council for Economic Defense) asked for the postponement of the trial of the partnership between Supergasbras and Ultragaz, the two big ones in the cooking gas market. The case was expected to be on the agenda in two weeks, but should only be decided in July.

The deal was approved by the General Superintendence of the body at the end of March without any restriction and went to Cade’s board under protests from the competition, especially Copagaz, which claims that the deal is a disguised merger.

Technicians who participated in the discussions this week say that the position of the rapporteur, counselor Lenise Prado, who changed her position, signaling a disapproval of the case, was strange.

The majority of the board, which had been lining up in defense of unrestricted approval, found the change strange and, therefore, asked for the postponement.

The agreement between Supergasbras and Ultragaz involves the sharing of LPG (liquefied petroleum gas) storage and bottling operations and infrastructure.

In addition to Copa Energia, consumer protection organizations also claim that the partnership could lead to a reduction in the supply of gas and an increase in consumer prices.

They say that the sharing of operations would be, in practice, a merger – something that Cade’s superintendence disagrees with.

The claimants claim that the partnership will give rise to a group that concentrates around 60% of the national market.

Supergasbras and Ultragaz deny the merger and claim that the partnership foresees the operational improvement of the bottling bases, maintaining the corporate, administrative and commercial independence of the two companies.

“One of the main benefits is providing increased access to infrastructure in areas where Supergasbras currently does not have its own bases, thus improving service to the population”, said Supergasbras.

For Ultragraz, the consortium “makes it possible to increase competitiveness in the sector, contributing to the improvement of the level of logistical service to customers and the access of Brazilians to more competitive and higher quality products.”

The general superintendence also saw no problems in the operation. In his opinion, Alexandre Barreto says that the formation of consortia “will not change the market share of each one of them”.

He also considers that the “incentives to suddenly stop contracts between competitors are not high”.

With Diego Felix

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