By Brazil Stock Guide – Brazil’s antitrust watchdog will deepen its scrutiny of transactions between A.P. Moller-Maersk A/S (MAERSKB DC) and Mediterranean Shipping Co. tied to the planned Tecon Santos 10 auction, reopening two deals that had already been cleared without restrictions by Cade’s technical staff.
Cade’s tribunal decided Wednesday to take a closer look at the arrangements governing the companies’ stakes in Brasil Terminal Portuário, or BTP, at the Port of Santos. Maersk and privately held MSC each control 50% of the terminal operator.
Under the proposed structure, if Maersk wins the Tecon 10 auction, its terminal unit would acquire MSC’s interest in BTP. If MSC wins, the transaction would work in the opposite direction, leaving the successful bidder with Tecon 10 while exiting the joint ownership structure at BTP.
The two transactions had previously received unconditional approval from Cade’s General Superintendence. The tribunal’s intervention means the agency will conduct a broader review before issuing a final decision.
Commercial ties under scrutiny
The next stage of the review is expected to focus on commercial links that could remain between Maersk and MSC even after they cease to jointly control BTP.
Cade plans to examine issues including long-term contracts, vessel-sharing arrangements, cargo-volume commitments, exclusivity provisions and mechanisms that could allow commercially sensitive information to continue flowing between the groups.
The cases will be overseen by Cade Commissioner Camila Alves. The additional review effectively postpones a final antitrust decision on the transactions, which form part of both shipping groups’ preparations for the Tecon 10 tender.
The ownership arrangements involve APM Terminals, part of the Maersk group, and Terminal Investment Ltd., or TiL, MSC’s terminal-investment arm.
R$ 6.4 billion Santos project
Tecon Santos 10 is one of Brazil’s largest planned port investments, with estimated capital expenditure of about R$ 6.45 billion, according to federal port regulator Antaq. The project calls for a new container terminal in the Saboó area of the Port of Santos, Latin America’s busiest port complex.
The concession is expected to run for 25 years and cover an area of more than 620,000 square meters. The government has been working on a model that could allow shipping companies and existing terminal operators at Santos to participate, subject to divestments if they win the auction.
That structure is particularly relevant for Maersk and MSC because their existing joint ownership of BTP could raise competition concerns if either company also secured control of the new terminal.
Cade’s General Superintendence had previously concluded that the proposed BTP ownership changes would not materially alter competitive conditions at Santos and cleared the transactions without restrictions.
Cade considers time limit on clearance
Cade President Diogo Thomson had considered requiring Maersk or MSC to seek a fresh antitrust review if either won Tecon 10, even in circumstances where the transaction would not normally meet mandatory notification requirements.
That proposal was dropped after the companies questioned the measure and concerns emerged that it would impose a company-specific requirement on the two shipping groups.
The tribunal has kept open another option: attaching an expiration date to any clearance granted for the BTP transactions. Under such a mechanism, the companies could be required to return to Cade if the transactions are not completed within a specified period and market conditions or the auction structure change materially.
Maersk is listed on Nasdaq Copenhagen, where its Class B shares trade under the ticker MAERSK-B. Its Bloomberg identifier is MAERSKB DC. MSC, BTP and TiL are privately held and do not have publicly traded equity tickers.
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