Antitrust watchdog clears Petz-Cobasi merger, orders sale of stores

The terms of the settlement, negotiated up to the start of the hearing were not released. The decision passed by a 5-1 vote.

Even among those who voted in favor, some board members said they will later submit written opinions detailing their views. As indicated during the session, Petz and Cobasi were required to sign an agreement with the CADE, including a divestment package that was not publicly detailed.

Reporting the case, board member José Levi did not disclose how many stores must be sold but said they are located in São Paulo and were defined after several rounds of negotiation. He added that the companies’ initial proposal fell short of what the CADE considered necessary.

A final round of talks on Tuesday (9) closed the deal around divestments in São Paulo only, diverging from recommendations by the CADE’s Department of Economic Studies, which had suggested selling stores nationwide.

According to Levi, the settlement was accepted because, after the divestitures, the market would be more competitive than it is today. Board member Carlos Jacques, who backed the report, said there is no definitive information on potential buyers but noted that “there may be one or more possible buyers.”

Petlove, a rival retailer that formally challenged the merger, has already signaled interest in acquiring the assets. At least one more company has also expressed interest, according to CADE Chair Gustavo Augusto Freitas de Lima.

Board member Victor Oliveira Fernandes said that, although he would have preferred a more cautious selection of stores for divestment, the negotiations reached “a good outcome” for the tribunal. He added that even if the number of stores aligned with the economic-studies team’s recommendation, their location and revenue should also be considered.

Board member Camila Cabral Pires Alves dissented, opposing the structure of the agreement. She argued that “even after the remedy (divestment obligation), a significant number of markets remain problematic,” noting that concentration levels exceed 50% in some regions.

The case reached the CADE’s tribunal at Petlove’s request. The competitor had called for the sale of 105 stores in the state of São Paulo to mitigate the merger’s competitive impact.

The CADE’s General Superintendence had previously cleared the deal without remedies, citing competition from online platforms and neighborhood pet shops.

Board member Diogo Thomson, formerly part of the General Superintendence, said he disagreed with how the technical team defined the relevant market. “This case should not represent a shift in long-standing retail jurisprudence, although it does suggest a need to examine offline and online channels jointly in the future,” he said.