The tribunal of Brazil’s competition authority CADE is likely to conduct additional fact-finding inquiries in its review of the Subsea7/Saipem energy services merger, according to a source familiar with the matter and an antitrust lawyer following it.

Lead Commissioner Camila Alves has agreed to hear the appeals against the unconditional approval of the deal by CADE’s General Superintendent’s Office (SG), as reported. The appeals were filed by third parties Petrobras and the Brazilian Association of Oil and Gas Exploration and Production Companies (ABEP).

The additional fact-finding measures may amount to or include a request for CADE’s Economic Studies Department (DEE) to conduct a study, according to the people interviewed by this news service, who both noted that the tribunal is on a tight deadline.

Alves extended the merger review period by 90 days and noted the DEE’s relevance in economically complex cases. The merging parties and the third parties have all met with Alves’ office and the DEE on 15 July, according to CADE filings.

The two main issues that the tribunal is likely to focus on are the relevant market definition, and the criteria adopted by the SG to assess the idle capacity of specialized pipe-laying vessels (PLVs), according to the lawyer, who has been following the merger review for a client.

The relevant market definition is “just the tip of the iceberg,” the source said. The SG itself has acknowledged that rigid pipelines are the best solution for pre-salt fields but failed to define the market accordingly, having adopted a broad definition instead, according to the source.

The SG’s broad relevant market definition is the “original sin” that taints the understanding of other issues, such as the assessment of PLVs’ idle capacity, the source stated.

Both Petrobras and ABEP argued that the SG’s assessment of the availability and idle capacity of specialized PLVs – those with the capacity to lay rigid pipelines in deep and ultradeep waters – was exclusively based on evidence submitted by the merging parties.

The two ‘third parties’ urged CADE to reject the deal or, alternatively, to condition its approval on remedies including the sale of two specialized PLVs, as reported. Prior to the SG’s unconditional approval ruling, ABEP had been exclusively urging CADE to reject the deal.

According to the SG’s unconditional approval report, the third parties failed to refute Subsea7 and Saipem’s estimation that two or three rigid PLVs would suffice to meet the projected demand for rigid pipe-laying services in Brazil between 2026 and 2030. ABEP made “generic” allegations and Petrobras failed to introduce new data apt to change the SG’s conclusions, the SG said in a footnote.

By contrast, Alves wrote that the appeals have posed specific challenges to the SG’s conclusions and raised legitimate questions.

The lawyer said they expect Alves, deemed a technically skilled and independent commissioner, to thoroughly test the third parties’ arguments.

It should be noted that last year, in the merger review of pet products retailers Petz and Cobasi, Alves was the only commissioner who declined to ratify the agreement conditional on which the deal was approved. The deal was approved conditional on the sale of stores, but Alves declined to side with the tribunal majority given a concern that the parties still had high market shares even in regions affected by the divestitures.

Saipem said it does not comment on ongoing regulatory proceedings. Subsea7 and CADE did not return requests for comment.