In the trial session on 22nd of June, the Administrative Council for Economic Defense of Brazil approved, with restrictions, the purchase of the Extrafarma drugstore chain by Pague Menos. The operation received approval from the Court of the autarchy conditioned to the sale of assets in eight municipalities in the Northeast region to another competing company.
With operations throughout the national territory, Pague Menos distributes cosmetics, personal hygiene products and medicines. Imifarma Produtos Farmacêuticos, Extrafarma, which develops activities in ten Brazilian states, supplies medicines and personal hygiene, beauty and cosmetics products on a wholesale basis. In addition to medicines, cosmetics and personal hygiene products, serving mainly its own pharmacies.
According to the case's rapporteur, counselor Gustavo Augusto, the competitive analysis showed that there is a risk of lack of competition, without players capable of creating competitive pressures on Pague Menos, in eight municipalities located in the Northeast region: Russas/CE; Canindé/CE; Northern Lemon/CE; Aracati/CE; Horizon/CE; Chapadinha/MA; Code/MA; and Caicó/RN.
To mitigate any damage to the competitive environment in these locations, the companies involved in the transaction submitted a proposal for a Concentration Control Agreement to CADE, indicating a market agent with purchasing power to acquire the set of assets of the business to be divested. in these municipalities: the Bruno Farma chain (Drogaria Ultrapopular Itapipoca).
In the Board's understanding, the buyer meets the necessary requirements to remove the competitive risks arising from the operation, as it is a regional network with a presence in the Northeast. In this sense, the Court approved the deal with the fix-it-first remedy. In other words, the buyer was previously defined, as well as the package of assets necessary and sufficient for the agent to be able to continue the transaction while maintaining the conditions of competition in the market affected by the merger.
“In addition to the behavioral remedies defined in the agreement negotiated within the scope of the General Superintendence, I understand that the identification of the buyer for the structural remedy before approval increases the probability that it will be effective, as well as reduces monitoring costs”,
explained Gustavo Augusto.
Through the Concentration Control Agreement, it was also established that Pague Menos and its affiliates may not acquire, in whole or in part, any of the assets that make up the divested business, for a period determined in the agreement, whose term is restricted to the parties.