Brazil: Brazilian antitrust regulators signalled on May 6 that the union of local brewer AmBev and Belgium's Interbrew might be on its way to approval, although they are still studying its future impact on the market, according to Reuters. Joao Grandino Rodas, the president of Brazil's Administrative Council of Economic Defense, or Cade, told a Congressional hearing on the protection of consumer rights that the $11.5 billion tie-up did not appear to pose a threat to the current competitiveness of the market. "As Interbrew does not take part in the Brazilian market, there would be no competition problem. It's a new entrant," he said. But he added that the Cade, which must approve the deal before it can be closed, was still studying whether the deal would limit future competition.

Interbrew and Companhia de Bebidas das Americas (AmBev) said on March 3 that they would merge operations to create InterbrewAmbev, the world's No.1 brewer by volume, surpassing Anheuser-Busch Cos. Inc. The union would bring heavyweight brands like Stella Artois, Beck's, and Skol under the same roof. But Schincariol, Brazil's No.2 brewer, filed a request with Brazilian antitrust authorities asking them to suspend the deal because it would hurt competition in Brazil.

AmBev controls about two-thirds of the Brazilian beer market. Its main rivals are privately owned Schincariol and Kaiser, which is owned by Canadian brewer Molson Inc.

Barbara Rosemberg, director of the Justice Ministry's Economic Rights Secretariat (SDE), also told the Congressional hearing that there appeared to be no competition problems with relation to the deal. She said the entrance of a new brewer to Brazil through AmBev would simply widen the company's brand portfolio.

At the same hearing, Brazil's Securities Exchange Commission, or CVM, said information about the huge deal had been leaked ahead of its announcement. "There were leaks, but we still do not know the impact of that on shareholders, if there was use of privileged information," Luiz Leonardo Cantidiano, outgoing president of the CVM, told the Congressional hearing.

On the day the deal was announced, AmBev co-president Victorio Carlos de Marchi told reporters that some details of the deal had leaked. At the time, a senior CVM source told Reuters it was obvious information had been released early because of the high volatility and volume of trade of AmBev's shares.

AmBev's shares were 0.7 percent higher at 554 reais in mid-afternoon trade in Brazil. The country's benchmark Bovespa stock index was down 3.7 percent at the time.

07 May, 2004