The Brazilian Justice Ministry has recommended that the country’s antitrust regulator demand that Swiss food giant Nestlé amend its acquisition of chocolate company Garoto.
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The Ministry is concerned that the acquisition would give Nestlé too much control of the market and that customers would lose out. The Finance Ministry’s antirust body, CADE, will take the recommendation into consideration as it continues to mull over whether or not to approve Nestlé’s agreed acquisition of Garoto. In the past, CADE has made merging companies sell assets to reduce the market power the new firm would hold to more acceptable levels.
Nestlé agreed in March to hold off making irreversible changes to Garoto, such as closing plants or laying off workers, until CADE had made a ruling on the acquisition.
Brazil’s economic rights secretariat the SDE said that there were other potential buyers that would present a smaller risk of the acquisition resulting in layoffs and plant closures. The SDE has also said that Nestlé’s control of the 401 to 500 gram chocolate bar market in Brazil would rise from 23.5% to 75.9% if it were allowed to acquire Garoto, reported Reuters.
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