Brazil authority terms Ipiranga deal as "potential to cause damage to market competition"

19-Apr-07

After a preliminary study, Brazil's anti-monopoly authority warned that the recent US$4 billion purchase of petrochemicals company Ipiranga had the "potential to cause damage to market competition." The authority did not recommend rejecting the deal or forcing the buyers to divest specific assets, but has recommended measures should be taken to guard against information sharing between competitors until a final decision is reached. In March, Brazil's state-run oil giant Petrobras announced plans to join with petrochemical companies Braskem and Ultrapar Participacoes to buy Ipiranga and divide up its petrochemicals and distribution assets. Findings indicate that the deal could give Petrobras too much control over distribution markets in some parts of Brazil's north, northeast and center-west regions. Danger of vertical integration in the petrochemicals industry could also surface because Petrobras was the main supplier of raw materials to most petrochemicals plants.