After almost 12 years in court, the merger between Garoto and Nestlé is inching closer to an approval from Cade. This may happen due to the approval, on November 18th, of Nestlé’s administrative motion for resolution of the case, which was filed in December 2015. In this package of proposals, the company suggested the enforcement of competitive remedies, which would allow the approval of the merger and, therefore, the end of the lawsuit. Cade’s change of attitude is due to changes in the market since 2012. Considering only the ice cream toppings’ segment, other companies entered the Brazilian market and Nestlé/Garoto are no longer the leader, moreover, they also have a high level of idle capacity in their factories. A different situation is seen in the chocolate market segment, since Cade considered the existence of a high degree of loyalty between consumers and brands and that the highest barrier to enter the market is actually due to recipes, textures and chocolate flavors. Therefore, having a portfolio with products that have high consumer fidelity brings competitive advantage to the company, which is Nestlé’s and Garoto’s case, who has remained the leader of the market during the last 15 years. For the approval of the merger, the companies will have to meet the proposed remedies, which will imply reducing their participation in the chocolate market. As of this moment no acquisition of assets has been notified to Cade. Finally, Cade’s Commissioners believe that this review of their decision will not create an unstable environment for their decisions, since this has occurred in a very specific and unique case.
2016/12/05
