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Brazil antitrust agency sees law in '10
May 6, 2010 / 3:46 PM / in 7 years

Brazil antitrust agency sees law in '10

BRASILIA (Reuters) - The head of Brazil’s antitrust regulator said he expects a bill aimed at modernizing the country’s antitrust system to be approved by the end of the year.

<p>Arthur Badin, head of Cade, Brazil's antitrust regulator, speaks during the Reuters Latin America Investment Summit in Brasilia, May 6, 2010. REUTERS/Ricardo Moraes</p>

Speaking at the Reuters Latin American Investment Summit in Brasilia on Thursday, Arthur Badin also said the watchdog known as CADE would keep close tabs on Brazil’s expanding construction industry for potential anti-competitive practices.

A bill aimed at reducing the time it takes for the antitrust regulator to analyze merger and acquisition cases has been approved by various commissions and now must be approved by the Senate and the Lower House of Congress.

The changes, if approved, would reduce the time it takes to assess simpler cases, which constitute 90 percent of all those taken up by CADE, to a maximum of 20 days from an average of 60 days currently.

“The current law imposes a cost associated with uncertainty and insecurity in the judicial (area) on businesses in Brazil,” Badin said, adding that he does not expect any opposition to the bill.

“Our challenge this year is to be able to address this issue in an election year,” he said.

Investors claim the agency takes years to rule on mergers, hindering companies’ ability to extract cost savings from deals and create jobs. The acquisition of local chocolate maker Garoto in 2002 by giant food company Nestle SA NESN.VX as well as Perdigao’s takeover of rival foodmaker Sadia last year have been delayed because of legal and regulatory hurdles that have dragged along CADE.

The construction industry is a priority market for antitrust investigations, Badin said, given its importance for the overall economy and the history of cartels in that sector.

“It’s one of the most important (markets) for economic development,” he said, adding that it represents 70 percent of the investment in fixed capital in Brazil.

“It’s a market that is heating up a lot and this could generate moves to limit the entry of new competitors by current (players),” he added.

CONCENTRATION

He said a recent flurry of mergers and acquisitions in Brazil in the aftermath of the global financial crisis is not worrying because bigger companies could increase efficiency.

“The creation of big companies is not necessarily bad for the country and for consumers,” he said.

Brazil has seen a series of major takeovers in the past two years, as a global financial crisis has inspired companies from various sectors such as finance and retail to join forces.

Itau and Unibanco combined in 2008 to form Itau Unibanco ITAU4.SA the largest financial services firm in Brazil by assets. More recently, Brazilian retail group Pao de Acucar (CBD.N) reached an agreement in December of 2009 to acquire a controlling stake in rival Casas Bahia.

Badin was more careful about commenting on companies that have benefited from steps by President Luiz Inacio Lula da Silva to enhance the state’s presence in sectors he deems strategic for the country.

On Wednesday, the Brazilian government said it would funnel billions of dollars into a plan to boost access to broadband Internet services among low-income households in a move that includes reviving former state telecommunications monopoly Telebras (TELB3.SA), which will be tasked with operating the backbone of the network.

Private telecom carriers allege the broadband plan could hurt them by creating a sub-market inside the market where they operate, but Badin said CADE would only look at the case if it included merger and acquisition operations in its capitalization.

Asked about the government’s plans to make state-run oil giant Petrobras (PETR4.SA) the sole operator of billions of barrels worth of oil reserves in the massive subsalt region off the coast of Brazil, he said: “It’s a decision which has to be taken democratically in Congress.”

Editing by Gerald E. McCormick

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