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Brazil's CADE probes John Deere/Precision Planting

Por: Latin LawyerImprimirVisualizar em PDF

Brazil's competition enforcer has expressed concerns about the Brazilian leg of John Deere's acquisition of Monsanto farming equipment subsidiary Precision Planting, after finding the deal could harm competition on the country's high-speed precision planting system market.

The Administrative Council for Economic Defence referred the deal to its internal tribunal on Tuesday, after finding the post-merger company could implement discriminatory pricing policies and limit rival machine providers' ability to buy Precision Planting parts.

John Deere filed a second notice to CADE announcing its commitment to purchase Precision Planting on 22 July 2016, after the authority said its original notice, which was submitted in February, was incomplete. Following the referral, CADE's tribunal will review the results of a market study carried out by the authority's investigators and issue a final verdict by March 2017.

Alongside concerns about the merger potentially leading to the combined entity being able to put in place discriminatory practices, the CADE report also stated Precision Planting's independence as a supplier of machine components maintains competition in the market by allowing companies to compete effectively with John Deere. The enforcer also determined the merger would allow John Deere access to several competitors' sensitive information.

Precision Planting manufactures components that are compatible with a variety of precision farming machines currently on the market, while John Deere only produces components that work with its own high-speed planting machines.

The authority has defined high-speed precision planting systems as technology allowing farmers to accurately plant rows of crops at twice the speed of regular planters. The technology can also facilitate the collection of data and monitoring of the planting process.

Olavo Zago Chinaglia, a partner at Pereira Neto | Macedo Advogados in São Paulo, said the enforcer sent out "dozens" of information requests to the parties' competitors, clients, and trade associations within the agribusiness industry.

"They [CADE] seem confident in their conclusions," Chinaglia added. "It is likely that they will block the merger, given the absence of alternative technologies in the marketplace." He added that adding "some ancillary agreements addressing concerns regarding discrimination would be enough".

The US Department of Justice's Antitrust Division sued to block the US part of the deal in late August, arguing it would virtually eliminate competition on the market for high-speed precision planting. John Deere and Precision Planting have contested the US enforcer's complaint.

John Deere and Precision Planting did not respond to requests for comment.

 

Counsel to John Deere Brasil

Pinheiro Neto Advogados

Partner Cristianne Saccab Zarzur and associate Ana Carolina Cabana Zoricic in São Paulo

 

Counsel to Precision Planting/Monsanto Brasil

Franceschini e Miranda - Advogados

Partner José Inácio Gonzaga Franceschini in São Paulo

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