1. F OOD V ALUE C HAINS : E XPERIENCES FROM B RAZIL M ÁRCIO DE O LIVEIRA J R. C OMMISSIONER St. Petersburg, May 2016

2. o The BRICS agenda on competition: sectors of social importance as priority for developing countries o Food value chains: sector of social importance o Brazil’s CADE has a considerable experience in the food sector, with several high-profile, robust decisions I NTRODUCTION

3. o Licensing of Monsanto’s technology to Bayer Variety of soy seeds with tolerance to glyphosate and resistance to bugs simultaneously General Superintendence issued technical opinion stating that the operation would not be of obligatory notification The Merger File was called up by the Tribunal, for possible anticompetitive concerns  The contract foresaw the transfer of technology between potential competitors  Possible vertical integration  needed antitrust analysis M ONSANTO /B AYER (2014)

4. o Technology transfer contracts as “associative agreements” (Art. 90, Brazilian Competition Law) Companies keep their economic and financial independence, without restructuring management However, companies have similar necessities, leading to parallel behavior  Similar interests  Common enterprise  Coordination of activities  Sharing of risks M ONSANTO /B AYER (2014)

5. o Approval with restrictions Changing of contract clauses referring to  Value sharing  Increased incentives  Minimum royalties  Commercial Soy System  Among others Exclusion of clauses that allow external influence of Monsanto over Bayer M ONSANTO /B AYER (2014)

6. o High complexity: merger of the two main companies of the sector of refrigerated food More than 50% of joint market share More than 80% of processed food Leader brands: high fidelity rates Vertical integration: rearing and slaughter (upstream) and distribution (downstream) Economies of scope Reporting commissioner voted for blocking the transaction S ADIA /P ERDIGÃO (2011)

7. o One of the commissioners requested access to file Reporting commissioner’s vote was essential to address the main anticompetitive concerns of the transaction  Important anticompetitive concerns  First Merger Agreement proposed by the parties was not enough Review commissioner rendered a vote for the approval conditioned to a new Merger Agreement providing for the divestment of part of the productive structure of the new company in the relevant markets with competition problems S ADIA /P ERDIGÃO (2011)

8. o New Merger Agreement Parties were more willing to negotiate remedies and recognized that the first agreement was not enough A successful package of remedies would reestablish the “virtuous duopoly” existing before the transaction Production and distribution: recreate a rival with a similar structure of the companies pre-merger Brands: divestment of some brands to third parties and suppression of one of the premium brands (“Perdigão”) for a defined term S ADIA /P ERDIGÃO (2011)

9. o The company BRF was created with the merger between Sadia and Perdigão o Minerva acquired cattle slaughtering units from BRF, all located in the state of Mato Grosso, Brazil o The operation was pro-competitive on the bovine fresh meat market Minerva would compete with BRF under better conditions M INERVA /BRF (2014)

10. o However, anticompetitive effects could happen in some processed food markets The participation of the companies together in some segments would reach levels of 80 % of market share o Structural remedy: divestment of assets in the production of processed foods by both companies This was stablished through a Merger Control Agreement (ACC) M INERVA /BRF (2014)

11. o Behavioral remedy: BRF would only have its political rights in Minerva once the ACC was fulfilled o The remedies are in accordance with CADE’s decision on the operation that created BRF It is necessary to continue preventing the increase of BRF’s market power M INERVA /BRF (2014)

12. o This operation consisted on a leasing transaction by JBS of three cattle slaughtering units from Rodopa o The plants of the units are located in the states of São Paulo, Mato Grosso do Sul and Goiás o CADE concluded that the operation could lead to the absorption by JBS of an important competitor in a market composed mainly by small competitors JBS/R ODOPA (2014)

13. o The approval of the merger was conditioned to remedies settled in a Merger Control Agreement (ACC) o The ACC determined, among other responsibilities that: Rodopa would have to:  Divest one of its brands  Put into function two of its cattle slaughtering units currently inactive (this could happen either by its own initiative or through divestment) JBS/R ODOPA (2014)

14. JBS would have to:  Maintain the plants subject to the transaction functioning  Not acquire new units in states in which the company holds a determined market share – the share limit is confidential o In the states in which JBS’s market share was not affected by the operation, the company compromised itself to notify CADE of any acquisition, rental or leasing JBS/R ODOPA (2014)

15. Thank you! marcio.oliveira@cade.gov.br