CADE proposes challenging the purchase of Genix by Capsugel

The General Superintendence of the Administrative Council for economic Defense (Cade) referred to the Court's analysis of the Act of concentration for the purchase of all the shares of the capital stock of Genix pharmaceutical industry by Capsugel, Brazil advisers recommending the impeachment of the dispatch operation, as published in the Diário Oficial da União.
The Capsugel operates worldwide, manufacturing a wide range of capsules used as raw material for the production of medicines.
The Genix, which operates exclusively in Brazil, also works with the manufacture of rigid capsules for the pharmaceutical, health and nutrition.
In a statement, the Superintendent reports that, after the analysis of information obtained from the parties, competitors and customers, found that Capsugel and Genix are the main suppliers of rigid capsules for the pharmaceutical industry and to the market of compounding pharmacies in Brazil.
Industry concentration is high, according to the Superintendency, being that there is only one competitor acting in this market in Brazil, but significantly less than the size of the two companies, which raised doubts about its ability to compete with the company resulting from the operation.
Thus, the acquisition would result in a near-monopoly, with more than 90% holding Capsugel OTC rigid capsules.
The supervision of the Cade also concluded that the possibility of entry of a new competitor would not be enough to ward off competitive concerns raised with high market concentration in the purchase function of Genix by Capsugel.
In addition, economic tests used by the supervision revealed that the Brazilian market of rigid capsules has distinct price dynamics international prices, probably due to the presence of an important national player-the Genix-imposing intense rivalry the Capsugel.
The tests also showed that the two companies are the main national competitors rigid capsules and, therefore, the acquisition of Genix would result in elevated possibility of undamped price.
"As a result of this anti-competitive potential, the Superintendent General understand that approval of the operation as presented could result in price increases of the product and, consequently, for medicines that the use as input", cites the note.
The Act of concentration was notified in November 2014. The legal deadline for the final decision of the Cade, which it is up to the Court of the organ, is 240 days, extendable for another 90.