Brazil's antitrust agency CADE (Conselho Administrativo de Defesa Econômica) has opposed Brazilian petrochemicals firm Braskem’s plan to acquire Solvay Indupa. Braskem had made the announcement of the acquisition of 70.59% of Solvay Indupa for US$290 million from Belgium owner Solvay late last year http://www.plasticsandrubberasia.com/dec2013/company9.html

Braskem had said it would buy not only the stake held by Solvay but also buy the remainder of Argentina-based Solvay Indupa stock that is listed on the Buenos Aires stock exchange.

In view of this, CADE said that the deal will increase Braskem's stake in Solvay Indupa Brasil to 99.99%, which would create a monopoly of Braskem in the PVC markets, with only three competitors in the country. CADE also added that Braskem could significantly increase prices after the transaction.

Meanwhile, Braskem says that based on the experience acquired in its activities in the PVC market over the last 35 years, it disagrees with CADE's decision, which it considers prejudicial to Brazilian manufacturers.

It says that as shown by over a dozen analyses, studies and reports issued by prominent economists, jurists and technical and financial consulting firms, the relevant PVC market is international, as recognised by CADE's own precedent consolidated over more than a decade. Moreover, with the objective of favourably concluding the transaction, Braskem presented solutions it deemed effective for resolving CADE's concerns and regrets that they were not accepted.

This decision, it says, weakens Brazil's petrochemical industry by affecting its capacity to capture of efficiencies of scale that would enable it to compete more effectively in international markets, particularly given the current scenario of the global PVC industry marked by lower profitability and a clear global trend of consolidation of assets.

Following the publication of CADE's decision, the company is currently evaluating the measures available to it with regard to the outcome.

Established in 1948, Solvay Indupa has two plants with an annual production capacity of 540 kilotonnes of PVC and 350 kilotonnes of caustic soda in Santo Andre, Brazil, and Bahia Blanca, Argentina.

Braskem had intended to increase its annual production capacity to 1.25 million tonnes of PVC and 890 ktonnes of caustic soda, upon completion of the deal.