On Monday, Brazil's Federal Court of Accounts (TCU) recommended, by a vote of six to three that the existing container terminal operator at the Port of Santos be barred from participating in the first round of bidding for the planned mega terminal, citing concerns about excessive market concentration.

Decision was a setback for companies such as Maersk and Mediterranean Shipping Co., which already operate container terminals at Latin America's largest port, as they can only the second round of auctions if the first round does not attract valid bids.

The two-stage bidding model proposed by the port regulator Antaq, which had been questioned Maersk in court, could have benefited companies backed by JBS (JBS.N), the meatpacking group that entered the shipping business last year as a container operator in the state of Santa Catarina.

The Brazilian government expects the winner of the auction for Tecon 10 to invest nearly 6 billion reais ($.11 billion) over 25 years and to increase the Santos port's container handling capacity by 50%, thus reducing a logistical bottleneck.

"ing the proposal to proceed with the auction in two stages increased the chances of the entrance of independent operators in (the port) and reduced the risk of a single operator controlling the," said Augusto Nardes, a member of Brazil's Federal Court of Accounts.

Maersk said in a statement that the Brazilian Federal Court of Accounts decision disregarded technical studies made by different Brazilian government agencies and added that the decision "greatly reduced the potential of this largest Latin American port project."

International Container Terminal, a Philippines-based company that operates 33 container handling terminals in several countries, welcomed the Brazilian Federal Court of Accounts' decision.

"This is a traditional and-known model in the infrastructure field that helps to encourage the effective entry of new participants in the Port of Santos," the company said in a statement.

The Brazilian Federal of Accounts' recommendation, however, was not unanimous, with member Benjamin Zymler backing an alternative model that would require the winner to divest assets if it is already an operator the Port of Santos.

Prosecutor Cristina Machado of Brazil's Federal Court of Accounts said the ban on existing operators from participating in the first round of au could violate the principle of competition in the bidding process.