Brazil’s antitrust regulator eyes high market concentration in proposed Localiza/Unidas merger

RIO DE JANEIRO, BRAZIL – The Administrative Council for Economic Defense (CADE) – Brazil’s national competition regulator – decided to analyze the proposed acquisition of Unidas by Localiza, as the merger may involve an excessive concentration in the car rental and fleet management markets.

In an official order, the General Superintendency of the antitrust agency listed a number of concerns as a consequence of the deal involving the merger of the leader and vice-leader in these markets.

Among them, the low probability of new competitors entering and reduced competition. The agency cited, in particular, the fact that, in some airports, “the company resulting from the operation would be consumers’ only option.”

CADE also pointed out that the operation will reduce the number of companies with national operations from 3 to 2, with the merged group holding “at least 60% to 70% of market share.”

Therefore, the institution classified the operation as “complex” and suggested a deeper analysis of the case.

Read also: Multi-billion merger between Localiza and Unidas faces strong opposition in CADE

Announced last September, the merger proposal would create a combined group with a market value of approximately R$50 (US$9.46) billion at the time and a fleet of 470,000 cars. Rivals Fleetzil, ALD Automotive, Movida, and Ouro Verde have urged CADE to intervene in the case.

The shares of the companies planning the merger surged on the São Paulo Stock Exchange on Thursday, with Localiza’s advancing 4.2%, while Unidas’ gained 5.2%.