Petrobras, White Martins negotiating with CADE over merger review of gas consortium

31 January 2017 9:54am

20th October 2016. By Carolina Guerra

Energy companies Petróleo Brasileiro, or Petrobras, White Martins and GásLocal are negotiating remedies with the Tribunal of the Brazilian competition authority in a case in which the regulator is reviewing a natural gas joint venture among the companies, MLex has learned.

In December 2013, CADE opened a formal probe into Gemini, formed by Petrobras and White Martins and operated by GásLocal, to check whether it benefited from preferential prices for gas or cross-subsidies, creating barriers to competition.

Officials with the Administrative Council for Economic Defense, or CADE, also decided to review an earlier decision that approved the consortium.

Negotiations are understood to be a procedure related to the merger review and apart from those dialogues, the regulator is still conducting the probe into the companies in a separate case.

It is understood, however, that both cases could be taken to CADE’s Tribunal together by December.

CADE councilor Paulo Burnier is handling the case at the Tribunal, as well as negotiations related to the proposed remedy. Terms are confidential.

It is understood that factors such as existing GásLocal gas supply contracts are points of discussion.

Gemini asked CADE this year to close the probe against the company, saying there was no anticompetitive conduct.

Petrobras told MLex “there is no definite position by CADE in this matter” and it “will continue acting firmly in defense of its rights.”

Price change Obligation

The Brazilian Superior Court of Justice has postponed a decision on whether a 2015 CADE injunction ordering White Martins and Petrobras to charge rivals the same prices they offer Gemini should stand. The measure was adopted as a stopgap remedy while the regulator investigates the case.

The case can be reviewed in a decision-making session scheduled for Oct. 24.

Joh Sung-Wook Interview