ArcelorMittal’s acquisition of Brazilian company Votorantim should be rejected because the move would reduce competition in the market, the country’s trade defence agency, CADE has recommended.

The Brazilian regulatory authority announced its detailed study of the potential economic impact of the merger this week, Kallanish notes.

“The purchase of Votorantim affects the national market of various steel products, such as steel inputs, rebar, wire rode and scrap buying. The merger of two of the country's three main suppliers of common long steel would eliminate a relevant competitor in a segment where the three largest companies have more than 80% of market supply,” CADE`s study suggests.

The case is now due for analysis by the Court of the Brazilian regulator for a final decision. The rulings by the Court may be applied unilaterally or by agreement with the parties, CADE adds.

As reported, ArcelorMittal and Votorantim signed an agreement on 23 February, according to which Votorantim’s steel mills will become part of ArcelorMittal Brasil.

The combination will result in a new unit capable of producing 5.6 million tonnes/year of crude steel and 5.4m t/y of finished long products. The production facilities will include ArcelorMittal's Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itaúna, and Votorantim’s sites at Barra Mansa, Resende and its participation in Sitrel, in Três Lagoas.