CADE, the Brazilian antitrust commission, has ordered Coca-Cola to cease to produce, distribute, and sell Nestle's iced teas (Nestea) in order to be allowed to conclude its acquisition of Brazilian leading tea producer, Leao Junior. Coca-Cola and Nestle had formed a joint-venture to produce and sell Nestea in Brazil, using Coca-Cola's plants and distribution system.

CADE verified that the acquisition of Leao Junior by Coca-Cola would create a quasi-duopoly in the country and that the resulting exercise of market power could not be deterred by entry. Entry was found to be unlikely and insufficient due to the high costs of establishing an efficient distribution system, brand loyalty, and incumbents' portfolio power. With the aim of safeguarding competition and preserving merger-specific efficiencies, CADE ordered Coca-Cola to cease and transfer all its operations related to the production and distribution of Nestea.

Lanna Peixoto Advogados (LP) - Antitrust Practice Group

For further information, please contact Bruno Peixoto at bpeixoto@lpglobal.com.br or +55 11 5185-2848