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The company failed to sell within the time limit set by Cade package of 10 brands and risk having to take them at auction, without stipulating the minimum price
By
Lorenna Rodrigues, from Estadão Content
access_time
June 27, 2017
Nestle: If the company does not comply, Cade may disapprove of the boy's purchase (REUTERS / Denis Balibouse / Reuters)
Brasilia – A Nestle has been unable to sell a package of 10 brands, including Serenata de Amor, Chokito, Lollo and Sensação, in the period determined by the Administrative Council for Economic Defense (Cade), and may have to take them at auction, without stipulating a minimum price.
The sale of the package had been negotiated with Cade to ensure, 16 years later, the approval of the purchase of the Boy in 2002.
The deadline, however, ends on Friday the 29th. It is the second time that the company does not respect the time allowed by the antitrust body. The first one was completed last October.
According to the O Estado de São Paulo newspaper and the Broadcast (Grupo Estado's real-time news service), the company must request that Cade Give more time to the company. For this, however, the agency may request a package change to include more "salable" brands that are more appealing to competitors.
Cade may further determine that Nestlé will sell the brands at auction without setting a minimum price, which could result in very low collection for the company.
If Nestlé does not comply, Cade may not buy Boy, which would mean that the two companies would be separated even if the operation was closed.
One of the difficulties for the company is that in the agreement, Cade banned the sale to a major rival, which reduced the list of potential buyers. With the ban, Lacta (Mondelez group), now the market leader behind Nestlé, was excluded from the negotiations. The buyer must be presented to Cade and approved by the board of directors before the closing of the transaction.
Another badessment of the agency is that the mere withdrawal of these brands is "out of the question" because it would mean the exit of the market from important products and could represent a competition for the Nestlé network itself.
In a statement, Nestlé Brazil said it remained committed to making "all the necessary efforts" to resolve the antitrust problem resulting from the acquisition of Chocolates Garoto. "Given the confidentiality of transactions with Cade, Nestle can not comment further on the case at this time.
The company said it was confident that the case could be resolved and that since the acquisition 16 years ago, it has always shown "willingness and commitment" to find a consensual solution to the operation.
Imbroglio
The merger of Nestle and Garoto was signed in 2002 and, two years later, Cade vetoed – at that time, the court ruled the transactions after they closed, a rule that changed in 2012. Nestlé appealed the decision in 2005. With that, Nestle had to separate Garoto's badets and was prevented from fully incorporating the brand.
Two years ago, Nestlé approached Cade to present a proposal for an agreement that would put an end to the lawsuit and the long legal dispute. The board of directors understood that the solutions presented by the company were sufficient to maintain competition and ratified the agreement in October 2016, allowing a period of one year for the sale, which was extended until June 29th.
At the time of the merger, Nestlé held 34% of the country's chocolate market – by buying Garoto, its share would reach 58%, compared to 33% for Lacta. Even with the arrival of competitors, the market continued to be dominated by the three companies 15 years later. The information comes from the newspaper O Estado de S. Paulo.
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