Shell Brazil Holding and Cosan S.A. in joint ethanol venture

4 Jan 2011

The European Commission has cleared the creation of a joint venture between Shell Brazil Holding and Cosan S.A. Indústria e Comércio of Brazil for the production, distribution and sale of sugar, ethanol and related products.

The Commission says the transaction should not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

While Shell Brazil Holding is part of the Shell global group of energy and petrochemical companies, Cosan is primarily active in Brazil in the manufacturing and trading of sugar and ethanol, the co-generation of electricity from sugarcane, the distribution of fuels and the production and distribution of lubricants in Brazil.

The joint venture’s activities aim to undertake the production, sale and trading of sugar and ethanol in Brazil and worldwide, the development and licensing of certain ethanol technologies, the supply, distribution and sale of transportation fuel products in Brazil and the production and sale of co-generation power at the sugar and ethanol facilities of the joint venture in Brazil.

The proposed transaction will also lead to vertical links, as the joint venture will act as a supplier of bio-ethanol to the downstream market of ex-refinery, non-retail, and retail sales of motor fuels, where Shell is active.

Due to the presence of a considerable number of other suppliers and the moderate market shares of both, the joint venture and Shell, on the upstream and the downstream markets, the Commission asserts that the proposed transaction will not raise competition concerns.

The transaction was notified to the Commission on 18 November 2010.

Carmel Doyle was a long-time reporter with Silicon Republic