The Administrative Council for Economic Defense (CADE) ruled on an appeal filed by CA Investment (Brazil) S.A. against an interim measure imposed during an investigation into alleged anti-competitive practices.
The investigation focused on whether CA Investment obstructed the operations of Eldorado Brasil Celulose S.A. (Eldorado) by exercising its political rights as a minority shareholder.
Background of the Investigation
The Office of the Superintendent General at CADE (SG) initiated an investigation following claims by Eldorado that CA Investment, a subsidiary of the Paper Excellence Group, used its voting and veto powers to hinder the company’s operations. This conflict arose within the broader context of a corporate dispute between CA Investment and J&F Investimentos S.A., the controlling shareholder of Eldorado, both of whom are vying for control over the company.
In November 2024, CADE launched an administrative proceeding and imposed an interim measure suspending CA Investment’s political rights in Eldorado to prevent potential anti-competitive behavior.
CA Investment’s Appeal and CADE’s Ruling
CA Investment subsequently appealed the interim measure. On review, the Tribunal of CADE partially granted the appeal, as reflected in the decision by rapporteur commissioner Victor Oliveira Fernandes. While acknowledging that CA Investment’s minority stake in Eldorado could allow for strategies aimed at increasing transaction costs in the pulp market, CADE revised the interim measure to restore CA Investment’s political rights—except for specific veto powers that could restrict Eldorado’s productive capacity expansion.
Protection of Competitive Market Dynamics
CADE’s decision was influenced by evidence suggesting that certain veto powers exercised by CA Investment could be used to block the implementation of a second hardwood pulp production line in Três Lagoas, Mato Grosso do Sul. The stalled project, expected to produce 2.3 million tons of pulp annually, remains entangled in corporate disputes over control of Eldorado.
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