Petz-Cobasi: Brazilian regulators reopen review of pet retail merger

The announcement of the merger between the major Brazilian pet retailers Petz and Cobasi was followed by market buzz, the unrestricted approval of the country’s competition regulator and an appeal from competitor Petlove.

Since it was filed in June, the Administrative Council for Economic Defense (CADE) reopened the appeal process in July and appointed counselor José Levi Mello do Amaral Júnior as the rapporteur of the case. 

“From what can be seen in the preliminary section, the appeal appears to present market data that deserves further investigation by the Court,” states Amaral.

Therefore, he requested a 90-day extension to the 240-day legal deadline for completing the case review. This gives CADE’S Administrative Court until the end of the year to evaluate the matter.

New developments 

In early September, the rapporteur requested an economic study on the offline and online pet retail market in Brazil to “support” the analysis of the case and “evaluate the need for any remedies, if applicable.” 

He also asked for the inclusion of topics such as consumption habits, purchase occasions for goods and services and competitive pressures between the physical and digital markets.

On 17 October, there will be a public hearing aimed at “consulting and discussing with society” the competitive aspects related to the pet market. According to counsellor Amaral, this study should be combined with the evidence and reports presented by Petz, Cobasi and Petlove throughout the process.

CADE sent letters in September to more than 90 competitors and 120 suppliers to conduct a market test and gather new evidence for the analysis.

In an interview with CNBC in Brazil, the president of Cade says that reopening and reassessing a case after an appeal is a natural move in mergers and acquisitions processes, that the initial decision was technical, but the court could uphold it or change it based on new evidence.

Back on 12 August, the Brazilian Congress held a public hearing on the topic. This hearing, however, was held at the request of a representative and is not part of the CADE process, but aims to bring society into the discussion. At the time, neither Petz nor Cobasi accepted the invitation to participate in the meeting.

The merger of the pet retailers is expected to create a new leader in the largest market in South America, with a combined revenue of R$6.9 billion ($1.32B/€1.15B) and a combined network of nearly 500 stores.