ANP Recommends Rejection of the Sale of 51% of Gaspetro to Compass  

The National Petroleum Agency (ANP) suggested to the Administrative Council for Economic Defense (CADE) that it reject the sale of 51% of Petrobras in Gaspetro to Compass. In the ANP’s assessment, the operation does not meet the objectives of the Term of Assignment of Conduct (TCC) signed between CADE and Petrobras, since Compass (part of the Cosan group) “has not demonstrated its independence in relation to the agents that make up the other links in the natural gas chain”. The information is contained in a joint technical note sent by the agency to the antitrust agency.

In the document, the ANP states that a “possible acquisition of Gaspetro by Compass has as one of the main negative effects, from a competitive perspective, the increase in the concentration of monopsony power exercised by piped gas distribution companies in the wholesale natural gas market in Brazil”.

In addition to recommending the disapproval of the deal, the ANP suggests the reopening of Gaspetro’s public offering process, with the possibility of separate bids for the acquisition of participation in each state piped gas distributor, in order to engender a structure of market more conducive to competition. As a reminder, Gaspetro is a holding company with equity interests in 19 natural gas distribution companies, located in all regions of Brazil.

“In addition, the other Gaspetro partners, in accordance with the shareholders’ agreement in certain distributors, will have a longer period to make possible use of their preemptive rights with a view to acquiring equity interest in Gaspetro in the respective distributor. The date of July 30, 2022 is considered as the new deadline for closing the sale process”, suggested the regulatory agency.

The ANP also stated in the document that in case CADE gives the guarantee for the purchase of 51% of Gaspetro by Compass, some measures will be necessary . One of them is the divestment of state piped gas state distributors whose purchasing power exceeds a certain threshold in the relevant market defined by the antitrust authority. The agency also suggests a commitment by Compass to act as a passive investor in Gaspetro, with the Cosan Group company, thus not electing members for the board of directors or executive officers or exercising significant influence over Gaspetro’s activities, as well as to enter into any contracts or agreements that regulate the exercise of voting rights.

The sale of Petrobras’ stake in Gaspetro to Compass was announced in July this year. The sale price is R$ 2.03 billion, to be paid upon closing, subject to the adjustments provided for in the contract. Compass is a company of the Cosan Group, created in 2020, with the objective of operating in the gas and energy segment. Currently, in addition to gas infrastructure, commercialization and energy generation projects, Compass is the controller of Comgas, the country’s largest gas distributor with more than 19,000 km of installed network and 2.1 million customers and presence in 94 municipalities of the State of São Paulo.