By Brazil Stock Guide – Brazil’s antitrust watchdog will review an appeal questioning United Airlines Holdings Inc.’s (UAL) proposed investment in Azul SA (AZUL), after allowing a consumer advocacy group to join the case as an interested third party.
The decision was taken Wednesday (28) by Cade President Gustavo Augusto Freitas de Lima, who authorized the participation of the Institute for Consumer and Society Research and Studies, known as IPSConsumo, in proceedings examining United’s planned $100 million capital injection into the Brazilian airline. The case will now be randomly assigned to a member of Cade’s tribunal for further analysis.
United’s investment forms part of Azul’s broader restructuring process linked to Chapter 11 proceedings in the United States. American Airlines Group Inc. (AAL) has also agreed to invest $100 million in Azul, though people familiar with the matter say the Brazilian carrier is waiting for Cade to conclude its review of United’s deal before submitting the American Airlines transaction for approval.
On Dec. 30, Cade’s General Superintendence issued a favorable opinion on United’s investment. Later that day, IPSConsumo filed objections and requested formal inclusion in the case. Under Cade rules, a superintendence decision becomes final after 15 days unless challenged by a tribunal member or an admitted third party.
In a filing dated Jan. 9, Lima asked IPSConsumo to submit documents supporting its claims that the transaction could harm competition, giving the group 15 days to do so. As the deadline for the decision to become final approached, the Cade president suspended the effects of the superintendence’s approval pending further submissions.
IPSConsumo argues that United’s minority stake in Azul, combined with its simultaneous participation in Abra Group—the holding company that controls Gol Linhas Aéreas Inteligentes SA (GOLL4)—could allow the exchange of competitively sensitive information and facilitate coordinated conduct. According to the institute, the structure could create a network of airlines capable of coordinated action, including United, Azul, Gol, Copa Airlines, Avianca and potentially American Airlines in the future.
The group also contends that the transaction would involve changes to Azul’s bylaws, including the creation of a Strategic Committee that would grant United special powers to influence operational decisions, effectively elevating the U.S. carrier to the status of a “strategic partner.”
Lima said the current decision does not address the merits of the deal or the validity of the allegations. He stressed that the ruling is preliminary and limited to deciding whether to admit the third party and forward the appeal to a tribunal member.
“For this reason, I ADMIT, on a preliminary basis, the entry of IPSConsumo as an interested third party, and therefore determine that the appeal be submitted for random distribution to one of the members of this Tribunal, with the urgency and speed the case requires,” Lima wrote.
He added that the rapporteur may later confirm IPSConsumo’s status or propose its removal, and will also assess whether the appeal meets procedural requirements, subject to confirmation by the full tribunal at a later stage.
In a statement, IPSConsumo President Juliana Pereira said Brazil’s competition authority must fully exercise its mandate. “The transaction between United and Azul was presented to Cade as a simple minority investment, which dispensed with a complementary analysis of the new ownership model and its impacts on competition,” she said.
Azul and United did not comment before publication.