Usiminas questions CSN's continued shareholder status and seeks legal resolution.
A mining company claims that the presence of a rival steel company in its shareholder structure is harming competition and the market.
247 - Usiminas, one of Brazil's largest steel companies, is at odds with Companhia Siderúrgica Nacional (CSN) over the rival's continued shareholder status. The dispute, which has lasted for over a decade, has recently taken a new turn, with Usiminas resorting to the courts to enforce a court decision requiring CSN to sell its shares in the company.
The case dates back to 2011 and 2012, when CSN acquired 16,42% of Usiminas' shares. In 2014, the Administrative Council for Economic Defense (Cade) considered the acquisition to be anti-competitive conduct and signed a Performance Commitment Agreement (TCD) with CSN, in which the company committed to reducing its stake to less than 5% of Usiminas' share capital within five years. However, CSN failed to comply with the agreement, and the deadline was extended indefinitely to 2022.
“CSN did not comply with the decision. In 2022, CADE (Brazil's antitrust authority) changed its understanding, and the deadline for the sale became indefinite. Usiminas went to court requesting the immediate sale of the shares and compliance with the agreement signed by CSN,” the company explained in a statement.
Negative impacts for Usiminas
The presence of CSN as a significant shareholder in Usiminas has generated a series of losses for the Minas Gerais-based company. Guilherme Poggiali, legal director of Usiminas, compared the situation to a football club having its biggest rival as a partner. “Can you imagine Atlético as a partner in Cruzeiro's SAF (Sociedade Anônima Desportiva)? It's absurd, but this happens in the steel sector due to CSN's stance,” stated Poggiali. newspaper interview The time.
According to the executive, CSN has already positioned itself against strategic initiatives by Usiminas, such as the capital increase carried out in 2016 by Ternium and Nippon Steel, which was crucial in pulling the company out of a serious financial crisis. Furthermore, CSN's presence in the shareholder structure reduces the liquidity of Usiminas' shares, since a large portion of the ordinary shares available on the stock exchange are held by its rival.
Court decision and next steps
The Federal Court of Belo Horizonte ordered CSN to sell its shares in Usiminas by July 10, 2024, but the company has not complied with the decision. The Regional Federal Court of the 6th Region (TRF-6) also confirmed the obligation to sell, but CSN continues to delay the process.
“CSN uses all sorts of tricks to delay the effect of the decision that is contrary to its interests, and this situation has been dragging on for more than ten years. This forces us to act in court to ensure compliance with the law and remove the illegal participation of our main competitor in the shareholding structure of Usiminas,” Poggiali emphasized.
Usiminas states that all necessary investments to fulfill its obligations are being made, but emphasizes that the lack of legal certainty could negatively affect the business environment in Brazil. "Legal certainty is an important aspect of the business environment. Its absence can affect numerous companies in Brazil with similar corporate structures and scare away investors," warned the legal director.
CADE and the defense of competition.
CADE, the leading authority responsible for ensuring free competition in the market, has already made it clear that CSN's presence as a shareholder in Usiminas constitutes anti-competitive conduct. Despite this, CSN continues to disregard court decisions and CADE's own rulings, remaining a shareholder of its rival.
While the legal process unfolds, Usiminas seeks to ensure that competition in the steel sector is preserved and that the company can pursue its strategic plan without interference from a direct competitor.
The case, which has dragged on for more than a decade, continues to generate debate about the need for stricter enforcement of competition laws in Brazil. Usiminas hopes that the courts will put an end to this dispute, guaranteeing the sale of CSN shares and the normalization of its shareholding structure.
