Brazilian antitrust watchdog CADE is expected to issue a recommendation for unrestricted approval for the sale of natural gas distributor Gaspetro, a subsidiary of state-run oil giant Petrobras, to energy trading company Compass.
CADE’s controversial decision can still be appealed and taken to CADE’s board of counselors, two sources participating in the case told Argus. If this happens, the board will decide on the proposal and may impose remedies and limitations, or simply follow an earlier recommendation from the regulator’s Technical body.
The committee in charge of Brazil’s gas market liberalization, headed by the ministry of mines and energy, has indicated that the purchase’s approval may hurt competition by leaving around 60% of all gas purchases in Brazil in Compass’ hands.
However, CADE’s ruling said that while Compass will have a large share of the gas market after buying Gaspetro, the removal of that distribution segment share from Petrobras is will result in overall benefits for competition.
CADE’s experts, who signed the decision, said there is risk of non-competitive practices such as “cherry-picking” and self dealing, with “implications for the development of the liberalized open market.” But they said that some level of purchasing side concentration must be accepted, and this can compensate for the power that gas suppliers hold.
Petrobras has been fighting a multi-year battle to regain solvency, being forced to sell off various assets. The state-run company has also had run-ins with CADE recently, having agreed in 2019 to sell its refinery assets as a condition to close a probe on antitrust allegations that it was abusing its dominant business position in the refining market.
Compass is the energy management branch of Brazilian holding company Cosan Group, which holds significant investment in various energy sectors, including filling stations, lubricant manufacturing, and transportation logistics, among other activities.
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