Read this Thursday’s edition of the FolhaMercado newsletter (8) – 06/08/2023 – Market

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Cade finally approves Nestlé-Garoto

21 years and four months after it was announced, the acquisition of the Garoto chocolate brand by Nestlé for R$ 1 billion was finally approved by Cade (Administrative Council for Economic Defense), this Wednesday.

Why did it take so long? At the time, with different legislation, companies could unite operations before the approval of the antitrust body, which had up to two years to judge the business.

• The municipality disapproved the purchase in 2004, with the justification that the two manufacturers together would have almost 60% of the chocolate market in the country.

• Nestlé had already made investments in Garoto, and ended up judicializing the decision. In 2005, he managed to keep the operation, a decision that ended up being annulled four years later.

• The fight in the courts continued until 2018, when the TRF (Tribunal Regional Federal) stated that Cade should reopen the case, which was only done in 2021.

What has changed? Cade considered that the two giants no longer dominate the sector, which has seen the rise of regional or cheaper brands.

Medicines: the antitrust body conditioned the approval of the deal to counterparts. Some of them are:

• Nestlé cannot, for five years, buy competitors representing 5% or more of the relevant chocolate market.

• Nestlé undertakes not to erect barriers to the importation of chocolate.

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Banks change card statement

Without much fanfare, some of the largest banks in the country are changing the closing date for credit card bills.

Understand: The change decreases the number of days between closing and invoice payment.

It also changes the so-called “best purchase day”, the date on which the consumer makes a purchase shortly after closing the invoice and ends up paying it only in the following month’s collection.

It’s not illegal: the practice of reducing the deadline for paying the invoice is part of the game, but the bank must inform the consumer of the change in advance.

What explains the change: with a shorter period for paying the invoice, banks reduce the period of “financing” for customers, that is, the difference between them receiving the settlement of the invoice and transferring the money to the establishment where the purchase was made.

• Institutions usually transfer the purchase amount to the store about 30 days after it has been made on the credit card.

• From the payment of the invoice to the transfer to the establishment, the amount is paid to the bank – which generates even more returns when interest rates are at current levels.

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Nubank joins the wave of layoffs

Nubank said on Wednesday that it laid off 296 employees as part of an integration of its operations area.

According to the digital bank, the sector was divided into units focused on each product, and the new multi-product platform generated positions that became redundant.

Nubank says it has offered the terminated employees a benefits package, which includes additional wages, a temporary extension of the health plan and a support budget for relocation in the market.

• At the end of 2022, roxinho had 8,049 employees in its operations in six countries.

Out of the wave: until now, according to reports from employees, the country’s largest fintech had been gradually making layoffs, which did not place it among the country’s technology companies that promoted massive cuts.

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Inflation surprises again

Inflation in Brazil again surprised economists in May, when it slowed to 0.23%.

• The market median predicted that the price index would close the month at a higher high of 0.33%.

In numbers: May’s result was the lowest for the month since 2020, when the pandemic paralyzed the economy. The accumulated 12 months reached 3.94%, at the lowest level since October 2020.

Route recalculation: the surprise made part of the market revise its projections for inflation at the end of this year and for the beginning of the cycle of low interest rates in the country.

• The numbers from some houses now predict that the IPCA will close the year a little above 5% – previous forecasts spoke of something close to 6%.

For the Selic, there is virtually a consensus that the Central Bank should not lower interest rates at this month’s meeting, but communicate that the cuts are coming.

• Of the 13 investment banks and analysis houses consulted by Sheeteight see a chance of starting monetary relief in the country in August.

Why inflation slowed in May:

1 – Drop in airline tickets and gasoline

• The passes receded 17.73% after skyrocketing nearly 12% in April. the gasoline dropped 1.93% with the cut promoted by Petrobras.

• Together, the two reduced the index by 0.21 percentage points.

2 – minor increase in food

• With the weather helping crops, the food and beverage group came out of an advance of 0.71% in April to 0.16% last month.

Opinion:

• Column Why? | Since the 1980s, the world economy has not faced such a serious inflationary problem.