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Rappi goes back to antitrust watchdog against iFood

Thalyta Dalmora - Blumenau, Santa Catarina, Brasil | Perfil profissional | LinkedIn

Just over a month after Uber announced it will operate in the Brazilian food delivery market only until March 7, delivery company Rappi filed a new petition with the Administrative Council for Economic Defense (Cade), Brazil’s antitrust regulator, defending the termination of all exclusivity contracts held by iFood with restaurants and bars.

In the document, Rappi asks the watchdog to review a provisional measure from March last year, which establishes the blocking of new exclusive contracts of iFood with restaurants, keeping the agreements prior to the determination.

Until September last year, iFood had 80% of the food delivery market in the country, followed by Uber (25%) and Rappi (18%), according to data from the Brazilian Association of Bars and Restaurants (Abrasel).

Uber’s exit from this sector and the shutdown of the Delivery Center are Rappi’s main arguments to request the reopening of the case by Cade. The Delivery Center was a service focused on restaurants and shopping malls stores, which had BRMalls and Multiplan among its partners – it closed the operation in November.

According to Rappi, the moves are “evidence that, even with the preventive action of Cade, the practices of iFood continue to damage the market, requiring the adoption of new restrictions by the regulator.”

The president of Abrasel, Paulo Solmucci, criticized Rappi’s position in defending only the end of iFood’s exclusivity with stores because the company also operates with exclusive contracts.

“If Rappi was genuinely in a pro-market movement it should enter as an interested third party in our lawsuit and ask for the end of exclusivity as a whole,” Mr. Solmucci told Valor.

Abrasel filed its own request in December 2020, advocating for an end to all exclusive contracts between food delivery apps — in addition to enter as an interested party in Rappi’s lawsuit against iFood with Cade in September. “The genuine speech that Abrasel would applaud is that of a healthy market and free competition,” says Mr. Solmucci.

The new petition filed Tuesday by Rappi asks Cade to suspend the requirement of a termination fine for the breach of exclusivity of all contracts concluded by iFood with restaurants. “In the case of contracts that have specific investments in infrastructure, the rescission fine may not exceed the amount invested.”

The document also mentions a recent decision by the Norwegian competition authority to prevent Delivery Hero, which operates the online delivery platform Foodora in that country, from entering into exclusive contracts with stores for a period of three years.

In a note, iFood said that “the online delivery market is constantly evolving, with frequent entry of new competitors and the emergence of new business models,” that its commercial policies “are in strict compliance with the competition legislation” and that it “will continue to cooperate with the authorities in charge of the matter.”

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Antitrust watchdog approves Oi Móvel sale to trio of giant telecoms

Brazil's antitrust regulator CADE — Foto: Valor
Brazil’s antitrust regulator CADE — Foto: Valor

During a tense session that lasted almost four hours on Wednesday, the Administrative Council for Economic Defense (CADE) approved the sale of Oi Móvel to Telefônica (owner of Vivo), TIM and Claro, joined in alliance. The approval for the operation is followed by severe measures to preserve competition, such as the obligation of telecoms to sell half of the base transceiver stations (ERBs, or antennas) they will receive from Oi.

Telefonica’s CEO Christian Gebara told Valor that Oi Móvel remains an attractive business, despite the imposition of stronger-than-expected remedies. “The remedies presented by Anatel and CADE´s General Superintendence were already strong enough and adequate for the operation,” said Mr. Gebara.

The transaction was approved with the determination that “remedies” are applied before the deal is completed. This is part of an Agreement on Merger Control (ACC) negotiated between the antitrust agency and the buyers.

For Oi, the sale of the asset will generate the resources necessary for the execution of the company’s new strategic plan, said the president of Oi, Rodrigo Abreu, in a statement. The mobile services unit was sold in a judicial auction in December 2020 for R$16.5 billion.

Among the various aspects cited by Oi as important with this transaction, is the feasibility of reducing its debt, “being the main source of cash to pay bankruptcy and extra-bankruptcy creditors, among which are BNDES, Anatel, the Banco do Brasil and Caixa Econômica Federal, in addition to enabling the maintenance of the other activities of the company’s recovery process.” Net debt stood at R$29.9 billion in the third quarter of 2021.

The endorsement of the deal shows that in the struggle between the trio of teles on one side, and on the other, several regional and incoming operators, such as Algar Telecom and Copel/Sercomtel, the giants won by force. Controlled by the Bordeaux fund, led by businessman Nelson Tanure, Copel gave up the fight, said CEO Wendell Oliveira.

The owner of Vivo will pay an estimated amount of R$5.5 billion for its share in the business. According to the CEO, Telefônica has more than enough cash to sustain the operation.

Mr. Gebara said at the moment he does not have information on the impact of the revenue from the assets of Oi Móvel for Telefônica, since the revenue from the company’s customers will only be accounted for in its group after the closing of the deal.

Telefônica will also receive around 10 million customers, most of them in the Northeast region, where it has a lower market share and excess capacity, and in the state of Paraná.

About how much this asset will add to Vivo’s revenue, the executive preferred not to anticipate. He said there are many issues still to be resolved upon closing the deal.

“Oi’s customers will be well received,” said Mr. Gebara, adding that they will be able to count on Vivo’s entire product portfolio. They will even be able to browse the internet at a frequency of 700 megahertz, for 4G, and on 5G — Oi does not have any of them.

“It is the end of a long regulatory and competitive approval process, which allows for an important rearrangement of the sector, with more services and competition for the consumer,” said the executive about the approval of the antitrust body.

According to calculations made by a source that follows the sale of the asset, the division between the telcos is done, but may be updated. From the value of the deal, TIM will pay 44.3%, Vivo (33.7%) and Claro (22%).

Of the number of Oi’s clients, TIM will keep 14.5 million (40%); Vivo, 10.5 million (29%) and Claro, 11.6 million (31%).

Of the infrastructure part, TIM will have 7,500 ERBs (50%), Vivo 2,700 (18%) and Claro 4,700 (31%).

TIM will receive 54% of the spectrum (49 MHz) and Vivo, 46% (43 MHz). Claro, which already reached the limit established by Anatel when bought Nextel, won’t take anything in this operation.

Oi’s common shares and preferred closed in fall in B3.

Source: Valor International

https://valorinternational.globo.com

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