Nestle approaches Brazil government to settle Garoto antitrust court case

Nestle SA approached the Brazilian government with a proposal to sell assets and settle a six-year court dispute related to its purchase of Chocolates Garoto SA, which was blocked by antitrust regulators, according to two government officials.

The first meeting took place on Sept. 16 at the attorney general's office, according to Antonio Henrique Pinheiro Silveira and Mariana Tavares, secretaries of the antitrust arms of the Finance Ministry and Justice Ministry, respectively. Silveira and Tavares were present, along with lawyers for Nestle Brasil Ltda. and the attorney general, Luis Inacio Lucena Adams.

"The discussions are very preliminary," Tavares said in a Sept. 24 telephone interview from Brasilia. Silveira spoke about the matter in a Sept. 23 interview, also in the capital.

Nestle's proposed purchase of Garoto in 2002 was the first time Brazil's antitrust regulator, known as Cade, completely rejected an acquisition. Representatives from the regulator weren't invited to the meeting, according to the officials. Cade President Arthur Badin said by e-mail he had no knowledge of the talks.

The antitrust ruling can't be reversed out of court without Cade's approval, Badin said. Any new proposal from Nestle will have to be processed by Cade's attorney and judged by the agency's six-strong plenary, he added.

Robin Tickle, a spokesman for Nestle in Vevey, Switzerland, said the company declined to comment on the matter.

After Cade's decision in 2004, Nestle offered to sell a line of chocolate coatings that it said corresponded to 46 percent of domestic demand for the product. The company also offered to sell chocolate brands. The proposal was rejected by Cade, and Nestle decided to take the matter to court.

Silveira said a Nestle proposal to sell some brands may not be sufficient. He said all competition conditions in the industry must be evaluated, including distribution.

(Published by Bloomberg - October 5, 2010)