SAO PAULO – CADE’s General Superintendence, the Administrative Council for Economic Defense, issued an opinion last night (6) recommending the approval of the merger between Localiza (RENT3) and Unidas (LCAM3) through “remedies”. The deal is now being evaluated by the Cade’s Court, with a deadline until January 2022.
In a document with more than 200 pages, Cade stated that the concentration of operations “generates relevant risks for the competitive environment in the vehicle leasing market (RAC)”. The size of the concentration in the RAC, according to the autarchy, would be 70% after the merger of the two companies.
And, in addition to the RAC, the markets for fleet management and outsourcing (GTF) and the sale of used vehicles in wholesale and retail (semi-new) would also be harmed. “This operation entails horizontal overlaps in all the indicated markets”, highlighted Cade in its opinion.
About the RAC, Cade stated that “the post-operation market would be highly concentrated, would have only one other competitor with national presence (Movida) and the fringe, composed of regional and local players, and would not be able to effectively compete with the national rental companies.”
In the car rental segment alone, the new company would hold the Localiza, Unidas and international brands of Vanguard, Enterprise, National and Alamo. “The offer of all these brands by such a relevant player in the RAC market has the potential to generate a false illusion for customers that they would be comparing prices of competitors, when, in fact, they are brands managed by the same agent”, highlighted Cade.
In the segment of fleet management and outsourcing (GTF), Cade said that the exercise of market power by the applicants is not likely — Unidas is the largest player in fleet management in Brazil.
What happens now?
The autarchy recommended the signing of an ACC, an Agreement on Control of Concentrations, with structural and behavioral remedies, which must be analyzed by the Court of Cade and by the companies involved in the operation.
Competitors in the vehicle rental market, such as Movida (MOVI3), have already taken a stand against Cade’s approval of the operation. In a recent interview with InfoMoney on the Inside the Results project, Movida’s CFO, Edmar Lopes, reinforced the company’s position on the subject — click here to watch the live in full.
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