Source: Latin Lawyer
Two associations of Uruguayan cattle producers have called on Posadas to secure an historic antitrust refusal from the local competition agency for Minerva’s acquisition of three local meat packing plants from fellow Brazilian company Marfrig.
Uruguay’s Commission for the Promotion and Defence of Competition gave its ruling on 20 May, in which the agency rejected Minerva’s purchase of three meatpacking facilities from Marfrig in Uruguay as it would have reduced market competition.
Minerva agreed to buy the facilities from Marfrig back in August as part of a wider US$1.5 billion deal involving additional assets in Argentina, Brazil and Chile. The Uruguayan leg of the deal is worth US$140 million.
In November, Minerva requested authorisation from the Uruguayan competition agency to acquire the three meatpacking plants in the Uruguayan regions of Colonia, San José and Salto.
Given the complexity of the transaction and its potential anticompetitive effects, the commission opted to conduct its analysis under the Phase 2 procedure, which involves giving notice to third parties for them to submit allegations of potential anticompetitive effects.
Posadas’ clients – Asociación Rural del Uruguay and Federación Rural del Uruguay – filed their formal opposition in the procedure.
The two associations, representing Uruguay’s cattle producers, argued that the deal would have brought Minerva’s market share in the Uruguayan meatpacking industry to around 50%.
The commission’s ruling on 20 May rejected the acquisition in all its terms, as well as any alternative remedies. In its ruling, the agency stated that the deal would create a “highly concentrated market, in which a single company would have market power and the ability to limit, distort or substantially reduce competition.”
Whilst the decision can be appealed, the ruling marks the first time that the Uruguayan antitrust authority has wholly rejected a transaction in Uruguay. Prior deals have been authorised subject to behavioural remedies, but a complete transaction denial had not previously occurred.
Posadas partner Fernando de Posadas describes the case as “a significant milestone on a national level.” He adds that local market observers are questioning whether the outright refusal by the commission “was rooted in the specific characteristics of the transaction or if it suggests a shift towards a stricter application of merger control standards by the Uruguayan antitrust authority.”
Most of the assets detailed in the broader US$1.5 billion deal are based in Brazil, where local antitrust authority CADE is analysing the acquisition – a decision is expected before the end of 2024.
Headquartered in São Paulo, Minerva is one of Latin America’s largest meat producers. It operates in Argentina, Brazil, Colombia, Paraguay and Uruguay.
Marfrig is Brazil’s second-largest food producer, after JBS. It exports its products – predominantly beef – to more than 100 countries.
Counsel to Asociación Rural del Uruguay and Federación Rural del Uruguay
Posadas
Partners Fernando de Posadas and Diego Gamarra, and associates Federico Samudio, Magdalena Cuñarro and Luciana López