Log in or Register for enhanced features | Forgotten Password?
White Papers | Suppliers | Events | Report Store | Companies | Dining Club | Videos

Power Distribution
Utilities Network
Return to: EBR Home | Power Distribution | Utilities Network

Brazil antitrust body blocks Ultragaz’ $884m acquisition of Petrobras’ Liquigas

EBR Staff Writer Published 01 March 2018

Ultragaz’s proposal to buy Liquigas Distribuidora from Petróleo Brasileiro’s (Petrobras) for BRL 2.8bn ($884m) has been blocked by Brazil's Court of the Administrative Council for Economic Defense (CADE) over competition concerns.

The decision from the Brazilian antitrust watchdog CADE comes following the disapproval of the transaction by a majority of its members.

CADE has also ordered Ultragaz's distribution unit to pay a compensation of BRL 286.2m ($88.16m) to Petrobras.  

The transaction has now been terminated, said Petrobras.

The company said in a statement: “Petrobras will analyze immediately the alternatives for the divestment of Liquigás that remains in the partnerships and divestments program of Petrobras in accordance with its Strategic Plan, which aims to optimize the business portfolio, with focus on oil and gas, withdrawing entirely from LPG distribution.”

The Brazilian national oil company has been looking to divest some of its assets to reduce its massive debt.

In November 2016, Ultragaz, which is a subsidiary of conglomerate Ultrapar Participações, agreed to buy its rival LPG distribution business Liquigás.

However, the transaction ran into trouble after General Superintendence (GS), a division of CADE raised competition concerns in August 2017 and went on to recommend its disapproval.

GS had then claimed that the sale of Liquigas to Ultragaz will create a new player having unfair regional market power, reported Reuters. It further said that it would not be easy to balance out the unfair advantage of the combination through divestitures.

GS also said that the transaction would eliminate one of the four major players in the LPG distribution market, which has a market share of 85%. Subsequently, the deal could pave way for a possible situation of price collusion among the remaining three players, as per GS’ conclusion.

Petrobras and Ultragaz had then said that they could resolve the competition concerns raised by GS through certain initiatives. However, the CADE court has rejected the transaction, altogether.