Two months after approval, by the Administrative Council for Economic Defense (Cade), of the operation involving Azul and United Airlines, the Brazilian airline and American Airlines formally notified the antitrust body of the acquisition of the North American company’s shareholding in the Brazilian airline.
The notification, published this Thursday, 9th, occurred after the Institute for Research and Studies of Society and Consumption (IPSConsumo) presented a petition to the body with signs of premature integration between the companies, an illegal practice known as gun jumping.
The president of IPSConsumo and former national Consumer Secretary, Juliana Pereira, states that the notification represents a necessary step towards protecting competition and consumers. “Cade must analyze competition on routes, connectivity, prices, network integration and possible indirect effects through global alliances, considering the new scenario of Azul under the simultaneous influence of American and United and the cross relations with Gol”, he maintains.
According to Juliana, the operation is not limited to a typical commercial agreement, such as codeshare (route sharing). In her view, there are elements of corporate influence that expand the scope of the analysis to topics such as governance, access to sensitive information and possible coordinated effects on the market.
Among the signs of premature integration identified by the IPS are the election of an American executive, Jeff Ogar, to Azul’s board of directors and strategic committee; signing a subscription contract for warrantswhich gives American the right to acquire equity interest; and public statements by Azul executives indicating the prior participation of American and United in strategic decisions during the judicial recovery process (Chapter 11) us United States.
Within the scope of the process, it will be up to Cade to assess whether there was an early consummation of the operation before notification. If acts of gun jumpingthe body can apply sanctions, including imposing fines on the companies involved.
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When Azul’s operation with United was approved by the Cade court, in February this year, the case’s rapporteur, counselor Diogo Thomson, presented some reservations involving governance commitments and compliance.
He signaled that if and when American Airlines enters Azul, Cade will carry out a more in-depth competition analysis, including assessing the need to adopt mitigating measures as a condition for its approval. “The competitive scenario could be substantially changed in the event of American Airlines’ effective entry into Azul’s corporate structure”, he pointed out.
When contacted, Azul said it would not comment.
