Large energy consumers are asking the Administrative Council for Economic Defense (CADE) to reject the sale of Gaspetro, a Petrobras subsidiary that participates in 19 piped gas distributors, to Compass Gas & Energy, of the Cosan group.
They claim that the operation aggravates competition problems in the natural gas sector and hurts the terms of the agreement signed between Petrobras and CADE itself to reduce the state participation in this market, which Petrobras and Compass contest.
CADE has already received similar requests from Abrace (Brazilian Association of Large Energy Consumers), Abividro (Brazilian Glass Industry Association) and ATGás (Association of Natural Gas Pipeline Transportation Companies).
Abep (Brazilian Association of Petroleum Exploration and Production Companies) is also representing Cade on the issue. The market fears that the process unleashes a setback in the model proposed by the new Gas Law, approved in March, which encourages the sector's deverticalization.
The operation was concluded in July, in the amount of R$2 billion. With the purchase of Gaspetro, the Cosan group will have a stake in about two-thirds of the total volume of natural gas distributed in the country, including Comgás and the distributors in which the state-owned company has a stake.
Compass also operates in the sale of natural gas and has a project for the construction of an import terminal and a gas pipeline connecting the pre-salt reserves to the coast of São Paulo, which could make it difficult for new sellers of the fuel in the Brazilian market.
"The way the transaction is presented, it is clear that it has the ability to generate capacity and incentives for Compass to benefit from the supply of gas to CDLs [local distribution companies] of its economic group," Abrace's petition filed with CADE states.
The sale of Gaspetro is part of the TCC (term of cessation of conduct) signed by Petrobras in 2019 to avoid Cade investigations on abuse of economic power in the natural gas market. The associations argue that the agreement prevented the transfer of the business to a company with participation in other links of the fuel chain.
"Notwithstanding the breach of the TCC, the operation aggravates competition problems in the natural gas sector, especially in the gas trading market, generating barriers to entry and costs for competitors," Abrace says.
"Furthermore, the operation strengthens the purchasing and bargaining power of Gaspetro and Comgás, with the potential to harm the sector's competitive markets, such as the supply and commercialization of natural gas," it adds. Similar issues are raised by Abividro's petition.
The dispute places on opposite sides giant Cosan and some of Brazil's largest companies like Vale, Ambev and Gerdau, which are Abrace members. They already face each other in the debate over the renewal of the Comgás concession, also seen by the industry as a setback.
The proposal to give Compass another 20 years of the country's largest piped gas distributor is criticized by the industry for providing for the interconnection of the three São Paulo distributors to Compass' terminal on the São Paulo coast, making it possible to separate the São Paulo market from the rest of the country.
Petrobras came to suspend negotiations with Compass, claiming that it hurt the TCC, but then turned back and said to have opinion of Cade allowing the resumption of negotiations. The associations that pending the rejection of the process complain that this opinion was never published by the body.
The renewal proposal also faces resistance from SEAE (Competition and Competitiveness Advocacy Secretariat) of the Ministry of Economy, for whom the operation in the terms proposed by the state of São Paulo will reduce competition in the gas sector and impact tariffs paid by consumers in other states.
Petrobras and Cosan said they will not comment on the matter.
In the defense of the operation with Cade, the companies allege that the local gas distributors operate in distinct markets in different geographic areas as a natural monopoly. Therefore, there would be no risk of competition between them.
In addition, they say, the operation does not generate vertical integration, because Compass' investments in the natural gas sector would still be in the pre-operational phase.
They defend that the acquisition does not generate monopsony or bargaining power because Petrobras remains dominant in the national supply of gas and the producers have other alternatives for their production, such as export, reinjection or sale to free consumers.