September 5, 2017 / 10:53 PM / 10 months ago

UPDATE 1-Brazil watchdog arm recommends rejecting ArcelorMittal-Votorantim tie-up

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SAO PAULO, Sept 5 (Reuters) - A body of Brazil’s antitrust watchdog Cade has recommended the rejection of ArcelorMittal SA’s proposed acquisition of Votorantim Siderurgia SA, saying the tie-up would impact competition in the nation’s long steel market.

In a statement on Tuesday, Cade’s general superintendency said the merger of two of Brazil’s top-three long steelmakers could hamper competition. It said the deal could lead to price-fixing, giving the combined entity extra market power for scrap in Brazil’s southeastern region, the nation’s most industrious.

The recommendation comes as Brazil’s steel industry faces an increase in mergers after struggling this decade with the impact of cheap imports, a harsh recession and plunging government spending that sparked a drop in infrastructure works.

In recent months, Brazil’s long-docile antitrust watchdog has shocked executives by rejecting two high-profile planned takeovers this year, leading companies in the industrial and services sectors to mull alternatives to mergers.

ArcelorMittal, the world’s No. 1 steelmaker and also Brazil’s biggest producer of flat steel products, agreed in February to take over Votorantim Siderurgia’s local operations - a move that would create a player with capacity to make 5.6 million tonnes of raw steel annually.

In a separate statement, ArcelorMittal said the recommendation was “merely a technical concept whose analysis is an opinion.” Votorantim Siderurgia, a unit of Brazil’s largest diversified industrial group, said both companies would continue to cooperate with Cade to identify potential antitrust issues.

Shares of ArcelorMittal fell 1.3 percent to 22.51 euros in Amsterdam on Tuesday, paring back gains this year to about 7 percent. (Reporting by Guillermo Parra-Bernal and Alberto Alerigi Jr; Editing by Leslie Adler and Richard Chang)

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