Brazil plans $7 bln investment in urban infrastructure

Brazil will announce 15 billion reais ($7.2 billion) in urban sanitation and road investments in coming weeks, the country’s cities minister, Aguinaldo Ribeiro, said on Wednesday.

The investment plan will direct 5 billion reais toward paving roads and 10 billion reais toward basic sanitation as Brazil approaches municipal elections in October and President Dilma Rousseff tries to revive economic growth, which helped sweep her into office.

The funds originating from the Treasury will come on top of the 50 billion reais the government has already earmarked in so-called economic acceleration packages aimed at infrastructure in preparation for the 2014 World Cup and 2016 Rio Olympics.

Overdue investments in roads, airports, ports, sewage and other infrastructure are seen by economists as essential to putting Brazil on the path to sustainable growth, after major macroeconomic reforms in the 1990s and the emergence of a new middle class in the past decade fell into place.

The government has been attempting to prod the economy into motion by slashing interest rates, cutting taxes and weakening the currency, after growth nearly slipped into negative territory late last year and has been slow to bounce back.

The pending midterm municipal elections will be viewed by analysts as a referendum on the Rousseff government, which is now 18 months into its first four-year term.

Source: Reuters

Brazil assigns 4G cell spectrum for 2014 World Cup

Brazil divvied up frequencies on Tuesday for next-generation wireless broadband coverage required for the 2014 World Cup, racing ahead with blazing fast service in host cities even as coverage for older technologies lags in the rest of the country.

Telecom regulator Anatel awarded broadcast licenses for fourth generation (4G) cell service as well as frequencies aimed at rural broadband coverage in an auction that raised 2.56 billion reais ($1.24 billion) from Brazil’s biggest carriers.

Anatel president João Rezende said the results exceeded expectations, with carriers such as Telefonica Brasil, the Brazilian unit of Spain’s Telefonica paying as much as two thirds more than the minimum bids in the auction.

Shares of Telefonica Brasil rose 1.4 percent on Tuesday, less than the 1.9 percent advance of the benchmark Bovespa stock index.

Locally-listed rivals Grupo Oi and TIM Participacoes rose 3.5 percent and 4.5 percent, respectively, after they won licenses at a much slimmer premium.

Wireless company Claro, a unit of Mexican tycoon Carlos Slim’s America Movil, also won a slice of 4G spectrum.

The licenses came with obligations of minimum investments to provide 4G coverage in host cities for the Confederations Cup next year, a dress rehearsal for the World Cup in 2014.

Winners of the auction were also required to assume responsibility for providing less-profitable rural broadband service, a policy priority for President Dilma Rousseff.

The licenses stipulated at least 60 percent Brazilian content in hardware for the new frequencies, a requirement challenged by the United States and the European Union at the World Trade Organization.

The accumulated obligations associated with the new 4G spectrum led some in the industry to question whether additional costs would ultimately end up in the bill paid by users of the new technology. But bidding at the auction suggested the full range of carriers would be competing for customers.

Still, analysts and executives say the biggest challenge for wireless carriers in coming years is not providing cutting-edge 4G service, but rather bolstering coverage of third-generation technologies that remain spotty in much of the country.

Source: Reuters

Brazilian farmers launch the concept of a World Permanent Preservation Area at Rio +20

Sao Paulo, Brazil – The Brazilian Confederation of Agriculture and Livestock (CNA) will present their concept of a World Permanent Preservation Area (APP) during a talk at Rio + 20 Summit Eight scientists from around the world and specialists from the Brazilian Agricultural Research Corporation (Embrapa) and the National Water Agency (ANA) will also participate in this event. “Topics related to water access are discussed but nobody debates the need for the preservation of water sources. The idea is to discuss the concept of this topic and not only weigh issues”, states CNA’s President, Senator Kátia Abreu.

Among the topics that will be presented by Senator Kátia Abreu during the Summit are initiatives developed by CNA and Embrapa for the Biomes Project, such as sustainable actions for farming and a climate policy that guarantees the commerce of carbon credits in rural activities. “We will show that Brazil has the best farming methods on the planet, with production in 27% of its territory and preservation in 61% of the biomes”, she stated. The Rio + 20 Summit will take place from June 13th to 22nd, in Rio de Janeiro.

In São Paulo, where she inaugurated the Espaço CNA (CNA’s Center), at the Brazilian Rural Society (SRB) building, Senator Abreu reminded that deforestation rates are going down and that Brazil will be ahead of schedule to reach the deforestation reduction goal assumed in Copenhagen, Denmark, in 2009. At that time, Brazil committed to reduce the deforestation to 5.4 thousand square kilometers by 2020. In 2010, according to data from National Institute of Spacial Research (INPE), deforestation was 6.6 thousand square kilometers. “Brazil has reached 80% of the goal already making it way  ahead of the 2020 deadline”, she said.

According to CNA’s president, the decrease in deforestation and the many sustainable initiatives developed by Brazilian producers give Brazil the moral authority to discuss environmental issues during Rio+20. She also said that the rural producers are the ones who are more interested in preserving the original vegetation within their properties. “A depreciated farm reduces its productivity, incomes and profits – preservation is good for the producer’s patrimony”, she stated. Among typical Brazilian sustainable initiatives she referred to was direct planting, which avoids plowing the soil and deflects the CO2 loss. According to CNA’s president, 25 million hectares are farmed in Brazil using direct planting. She also defended forest planting and the farming and forest integration system.

Forest Code – CNA’s President also spoke about Brazilian President Dilma Rousseff’s vetoes on the Forest Code Bill. To fill the legal voids from the vetoes, the Federal Government proposed a Executive Order, which is already being discussed in the House of Representatives. For Senator Kátia Abreu, the discussion is “an opportunity to reach agreements”. According to her, it would be ideal if the States, with their environmental entities, could define the measurements of preservation on the river margins. She also stated that the nature trail adopted by the new law will block farming production in irrigated areas. Nowadays, this production is developed on 5 million hectares with the possibility of developing it on another 24 million hectares, which will be obstructed if the rule is sustained.

Brazil launches revamped antitrust regime

Gesner Oliveira was meeting counterparts from Portugal’s competition regulator in Lisbon more than a decade ago when he heard the news.

Brahma and Antarctica, the Brazilian beer groups, had agreed to merge in a deal that would eventually help form Anheuser Busch-InBev, the world’s largest brewer by sales.

“I thought it was a joke,” said Mr Oliveira, then head of Cade, Brazil’s fledgling antitrust body, recalling his surprise that the arch rivals were joining forces.

More importantly the transaction marked the start of Brazil as a globally important market for mergers and acquisitions.

While Cade approved the Brahma-Antarctica deal in the relatively quick time of around one year, the size, volume and complexity of mergers in Brazil has risen to such an extent that its antitrust regime is now being overhauled.

Last week, Brazil launched what the local press has been calling “super Cade” – a revamped body that will have more staff and will move from the previous, unwieldy “post-merger” approval system to a more conventional “pre-merger” framework.

“It will be a more sophisticated framework that brings Brazil in line with American and European antitrust standards,” said Fernando Iunes, head of investment banking for Itaú BBA, the Brazilian investment bank.

As Brazil has become more integrated with the global economy, the volume of cross-border and domestic deals has increased.

In the first quarter of this year, Brazil ranked seventh in the world for deal volumes, according to data company Dealogic. In the year-to-date, Brazil has hosted 214 transactions worth about $22bn.

Brazil’s post-merger antitrust approval system was one of the few of its kind in the world, alongside those of Egypt and Pakistan.

Merging parties would close their deals and worry about Cade later. Any disputes could be diverted to Brazil’s labyrinthine legal system, where cases can languish for years. In one example, Cade retrospectively blocked a link-up in 2002 between Switzerland’s Nestlé and Brazilian chocolate company Garoto. The case still continues.

As a result, only eight deals were blocked out of a total of about 8,000 transactions reviewed by Cade.

The post-merger notification system “made it very costly for Cade and very difficult to prohibit non-competitive mergers”, said Mr Oliveira, who now runs Go Associados, a consultancy specialising in antitrust and regulation.

The new system, in which companies will have to wait for Cade approval before closing their transactions, looks superior but is far from perfect, critics say.

Most concerning is the time Cade has to approve mergers – 60 days for simple deals but with maximum leeway of 330 days. This compares with the US system, in which 98 per cent of deals are approved within 30 days.

“In the US, a merger could get filed, reviewed, go to trial and [be] resolved in that time,” said Michael Cohen, a partner specialising in international antitrust issues at Paul Hastings, the law firm. “In Brazil that’s just the period for their review.”

Another earlier concern was a low threshold for the size of deals that should be scrutinised – initially set at R$400m ($195m) minimum revenue for the larger company in a transaction and R$30m for the smaller party. This has since been increased to R$750m and R$75m.

Ana Paula Martinez, lawyer with Levy & Salomão Advogados in São Paulo, estimates that the higher threshold will reduce Cade’s caseload by about half. This was positive since there were concerns over whether the agency would have sufficient staff.

The new law includes a “clawback” mechanism that allows Cade to review any transactions between companies smaller than the minimum thresholds up to one year after they are closed on antitrust grounds.

“In such cases it would be fair to assume that consumer associations, clients, suppliers, and competitors would file complaints against the transaction before the agency,” Ms Martinez said.

The new regime promises to be complicated but few dispute that it looks like a step in the right direction.

“Most firms, when they thought about mergers, they did not consider the competition risks. Now they will have to do that,” says Mr Oliveira

Source: Financial Time