Brazil’s antitrust regulator, Conselho Administrativo de Defesa Econômica (CADE), has ruled that the planned US$4 billion buyout of the Brazilian oil refiner and fuel distributor Ipiranga Group (Ipiranga) must be restructured to preserve competition in the petrochemicals industry. In March 2007, a consortium of companies that included Brazil’s state-controlled energy company, Petrobras Brasileiro S.A., and petrochemical firms, Braskem and Ultrapar, bought Ipiranga’s assets. The consortium’s plan to divide and integrate Ipiranga’s assets, however, was halted on April 17, 2007 when CADE issued an injunction preventing the takeover until it ruled on whether the transaction would create a monopoly. The injunction was based upon the conclusions that the sale of Ipiranga could harm competition in the petrochemical and fuel distribution markets.
On April 25, 2007, CADE revoked its injunction and ruled to allow the companies to go forward with the takeover, subject to certain conditions. Braskem, the leading provider of thermoplastic resins in Latin America, entered an agreement with CADE that preserves CADE’s power to reverse any portion of the transaction that it decides has an anticompetitive effect. In exchange, Braskem was granted full possession of its share of Ipiranga’s petrochemical assets. Petrobras and Ultrapar must now present to CADE a new plan for allocating Ipiranga’s fuel distribution assets that preserves competition in that sector.