Brazil
Sérgio Varella Bruna, Natalia S Pinheiro da Silveira and Isadora Postal Telli
Lobo & de Rizzo Advogados
- 1.What is the legislation applicable to merger control and how long has merger control legislation been in force?
The Brazilian statute that governs antitrust matters is Law No. 8,884/94 (Brazilian Competition Act). The basic purpose of the Competition Act is to protect free competition and maintain an open market policy in Brazil, and it has been in force since 1994.
It is worth noting that the Brazilian merger control regime may be subject to a significant reform in the near future. The Brazilian House of Representatives has recently passed a legislative bill reforming the Brazilian Competition Act so as to introduce a suspensory regime, under which the parties will not be allowed to close the transaction before clearance.
On December 2010 the bill was approved by the Senate amendments to the original text. The bill has now returned to the Brazilian House of Representatives to be reviewed and finally voted. The legislative process can still take many months to be concluded. Nevertheless, there seems to be a consensus amongst government, competition authorities and congressmen that our post-merger system is not appropriate and needs to be replaced by a pre-merger one, more aligned with the US and EU regimes.
- 2.Is there any additional sector- or industry-specific merger regulation legislation?
Some regulated industries, such as banking, telecommunications, insurance, among others, have specific rules regarding merger control and regulatory approvals in connection with the acquisition of interests in regulated companies. In some cases Brazil’s Council for Economic Defence (CADE) works in cooperation with other industry-specific bodies, which participate in merger control proceedings submitting their recommendations to CADE. For example, in the case of the Brazilian Telecommunications Agency (Agência Nacional de Telecomunicações - “ANATEL”) , the merger control filing is analysed primarily by ANATEL, but CADE is responsible for the final decision.
- 3.Are parties that are required to file notification of a transaction pre-closing obliged to not close their transaction pending regulatory review?
From a competition law perspective, the parties may implement the transaction before clearance, since there is no compulsory suspensory effect in the Brazilian regime. However, whenever there are significant anti-competitive concerns, CADE may adopt interim measures (medidas cautelares) to prevent the parties from closing the transaction. In most cases CADE invites the parties to negotiate a stand still agreement (acordo de reversibilidade de operação) in order to avoid the adoption of an interim order. Examples of transactions that were suspended by CADE during the past 12 months include: the merger of the two largest meat-based food manufactures in Brazil, Sadia and Perdigão, and the acquisition of Medley by Sanofi-Aventis.
Additionally, it is worth noting that in some regulated industries, such as telecommunications, electric energy, oil and gas and infrastructure, regulatory approval may be required before completion.
- 4.Where pre-closing notification and approval is required, can a transaction that has been approved be challenged after closing? Has this ever happened?
Not applicable. There is no suspensory regime in Brazil and the parties are allowed to close the transaction before final approval by CADE. However, in the event CADE eventually decides to deny its approval, it is entitled to order any measures deemed necessary to eliminate the effects of the transaction from the Brazilian territory. Permitted measures include, inter alia, the sale of assets and the rescission of contracts. We are unaware of any transaction that was expressly approved by CADE and that has been challenged in court afterwards. CADE itself is entitled to revoke its approval in the event it has relied on false or misleading information provided by the parties. Nevertheless, the Cosan/Shell’s case (Merger Filing No 08012.004341/2009-73) is running the risk of becoming the first transaction with an approval revoked by CADE. This may happen ff the parties fail to comply with CADE’s decision ordering Shell to sell all Jacta’s tangible assets to one buyer, so as to promote the entry of a new competitor in the market.
- 5.Who are the authorities responsible for merger enforcement and how is responsibility for investigation and decision-making allocated between authorities or within an authority?
The Brazilian antitrust authority is the Council for Economic Defence (CADE), an independent federal agency located in Brasilia that works within the Ministry of Justice. There are two other agencies concerned with antitrust matters: the Secretariat for Economic Monitoring (SEAE), a department located both in Rio de Janeiro and Brasilia, working within the Ministry of Finance, which reviews cases from an economic viewpoint; and the Secretariat of Economic Law (SDE), also located in Brasilia and working within the Ministry of Justice, which reviews acts and transactions from a legal point of view. Both SEAE and SDE issue non-binding opinions and CADE is responsible for final reviews and decisions.
- 6.Identify the last three times merger control legislation was used to prohibit a transaction, and for each, provide the ultimate outcome.
To date, only five mergers have been totally prohibited by CADE:
- Case No. 08012.004117/1999-67: on 22 November 2000, CADE prohibited a transaction in which ethanol producers intended to consolidate their commercial activities in order to stabilise prices which had been significantly reduced by excessive production and lack of demand due to transitional factors;
- Case No. 08012.001697/2002-89: on 4 February 2004, CADE ordered the Swiss multinational company Nestlé to sell the Brazilian chocolate company Garoto on the basis that the transaction resulted in a threat to free competition in the Brazilian market for chocolate frosting and chocolate;
- Case No. 08012.001885/2007-11: Owes Corning tried to acquire the fibreglass business from Saint-Gobain but the transaction was prohibited on 23 July 2008. Owes Corning and Saint-Gobain challenged the decision in court. However the parties have recently dropped their lawsuit and submitted a new transaction for approval, this time aiming at the sale of the same plant which should originally be sold under CADE’s decision.This was the first time a blocking decision was spontaneously complied with.
- Case No. 08012.008853/2008-28: on 22 July 2009, CADE prohibited the transaction between Hospital de Caridade Dr. Astrogildo de Azevedo and UNIMED Santa Maria relating to the acquisition of hospital Centro Médico Hospitalar located in Santa Maria, Rio Grande do Sul, and transference of health insurance accounts previously administrated by Hospital de Caridade to UNIMED.
- Case No. 08012.002467/2008-22: on October, 2010, CADE blocked the transaction involving the purchase of Tupi Cimentos by Polimix, a company in which the Votorantim Group owns 25% of the shares. The decision was due to the coordinated effects that the transaction would generate in the market for Portland-cement concrete.
- 7.With respect to notifiable transactions that raise no obvious competitive concerns, what is the expected time frame from notification to approval?
- 8.With respect to notifiable transactions that raise obvious competition concerns, what is the expected time frame from notification to a decision?
- 9.Which types of transactions must be notified?
According to the Competition Act, any transaction that may limit or otherwise restrain free competition, or that may result in a dominant position in any relevant market for certain products or services, must be notified to the Brazilian competition authorities for review. Transactions including (but not limited to) mergers, acquisitions, transfer of intellectual property, transfer of assets, joint ventures or cooperative agreements must be notified for clearance. As provided for by Ruling (Súmula) CADE No. 2, acquisitions of minority interests are exempted from a notification obligation provided that the acquisition is made by the controlling shareholder and subject to the following conditions:
- the seller must not hold powers under the law, by-laws or any agreement to appoint a director, or to influence commercial policies, or to veto corporate decisions;
- the transaction must not include a non-competition covenant exceeding five years in duration, or have a scope of application wider than the place of business of the target; and
- the transaction must not involve any other controlling rights between the buyer and the seller.
In its recent decisions, CADE has modified its understanding on the need for notification of transactions involving supply agreements when certain characteristics are met, such as: the transaction does not involve transfer of rights over significant assets and provides for no exclusivity clauses or similar restrictive covenants (Merger Case No. 08012.010018/2008-58, 08012.000182/2010-71 and 08012.005367/2010-72).
- 10.Where change in control is part of the test, what is the standard for defining control and changes thereof for pre-merger notification purposes?
Not applicable. A transaction must be notified if one of the thresholds described below is met regardless of the issue of change in control. Traditionally, even an acquisition of minority interests with no impact in the target’s control is deemed to be notifiable (with the exemption provided for by Súmula CADE No. 2).
- 11.What thresholds apply for determining whether a transaction must be notified?
A transaction must be notified for clearance if: the transaction results in a market share equal to or higher than 20 per cent of a given relevant market; or any of the parties alone has gross turnover exceeding 400 million reais in the most recent financial year. It is important to note that in relation to the above turnover threshold, the Brazilian antitrust authorities take into account the group’s turnover, in Brazil. These thresholds can be met by both or one of the parties and no overlaps are necessary, provided that one of the parties has presence or sales in the country.
- 12.In what conditions must transactions between foreign companies be notified?
According to CADE’s precedents, provided that one of the thresholds is met, acquisitions involving non-Brazilian entities must be notified for clearance whenever there is an impact on the Brazilian territory. Usually this is deemed to happen when the target has assets or revenues in Brazil but other situations may also be included. Such an obligation exists even when the parties’ activities in the country do not overlap. In addition, as there is no de minimis rule under Brazilian merger control rules, transactions involving non-Brazilian entities must be notified even if the target’s activities or assets in the country are insignificant.
- 13.Who must file the notification?
As a general rule, all parties to a transaction are deemed responsible for the filing. However, one party may file alone, especially if the other party is reluctant to do so (eg, hostile takeovers).
- 14.Are there filing fees?
There is a fee of 45,000 reais which must be paid on the date of filing (as currency rates in Brazil can be extremely volatile, it is advisable to check the amount of the filing fee at the time of the filing). All parties in the filing are responsible for the payment of the fee. Contractual arrangements allocating the responsibility for the fee among the parties, although legitimate and binding among them, cannot be enforced against the authorities.
- 15.Is there a standard form? How long does it take to prepare a filing? What type of information is generally required?
Yes. The Portuguese version of the form is available at www.cade.gov.br > Legislação > Resoluções > 1998 > Resolução n° 15 (Anexo I). After the triggering event (see question 16) the transaction must be filed for review within 15 working days. The form comprises information on the transaction and its parties, the parties’ groups and the target company, the relevant market to the transaction, any possible overlaps between the activities of the companies, turnover information, main suppliers, customers and competitors, among others. Also, some documents must be provided such as annual reports and a copy of the agreements. Please note that CADE has issued an electronic form that will substitute the current one, but the scope of the information required will remain almost the same.
- 16.When must notification be made? Is there a triggering event that requires a filing to be made within a specified period?
Pursuant to CADE’s Resolution No. 45/07, the counting of the notification term starts on ‘the date of the signing of the first binding document between the parties’. In practice, however, CADE considers almost any kind of document as ‘binding’ for the purpose of triggering a notification requirement. In accordance with such understanding, even documents normally considered ‘non-binding’ in most of the international transactions (such as memoranda of understandings, letters of intent and the like) can be deemed to trigger a notification requirement. As a consequence, while assessing whether or not a particular document is able to trigger a notification requirement in Brazil, one must have very conservative eyes, in order to avoid fines for late notification. After the triggering event the transaction must be filed within 15 working days.
- 17.When must notification be made with respect to acquisitions of convertible non-voting securities or options?
There are no specific rules regarding the timing for the filing of the above-mentioned acquisitions. As a general rule, the acquisition of convertible non-voting securities or options in non-listed companies would typically be notifiable despite the possibility of conversion into voting ones. On the other hand, the acquisition of the same securities or options in listed companies may or may not trigger the obligation to file, depending on the circumstances. In all instances the need for a notification must be assessed on a case-by-case basis.
- 18.Where there is an obligation not to close the transaction pending review, is there any alternative available to allow closing before formal clearance?
Not applicable. The parties may implement the transaction before clearance is obtained, since there is no compulsory suspensory effect in the Brazilian regime. However, whenever there are significant anti-competitive concerns, CADE may adopt interim measures (acordo de reversibilidade de operação or medida cautelar) under which the parties can be required not to close the transaction until clearance.
- 19.What is the timeline for review and clearance?
Brazilian antitrust clearance proceedings, which take on average between two and three months, can be divided into the following three successive stages:
- examination of the notification by SEAE which will issue its report on the economic impact of the notified transaction, in particular on whether or not there are any aspects or consequences that are detrimental to the relevant Brazilian markets.
- examination of the notification by SDE, which analyses the legal aspects of the transaction and prepares a report on any legal implications of the transaction; and
- final analysis by CADE.
The reports of SEAE and SDE are forwarded to CADE for final analysis. Then the Federal Public Prosecutor’s Office and CADE’s attorney general also issue non-binding opinions on the case. However, CADE is not bound by these reports. CADE gives its decision by majority vote at an oral hearing in Brasilia, at which the parties have their last opportunity to present their arguments orally. It is important to mention that this timetable is suspended whenever the authorities issue requests for further information until the answer to the request is provided by the relevant parties. Requests addressed to third parties such as competitors, suppliers and customers, are also deemed to suspend the timetable.
- 20.Are there post-clearance obligations imposed on the parties for a clearance decision to remain valid?
The law does not provide for such kinds of post-closing obligations, but CADE is entitled to impose similar commitments on a case-by-case basis.
- 21.Is there a simplified notification procedure with accelerated review periods? What type of transactions qualify?
According to the Joint Directive enacted by SEAE and SDE, the Horizontal Merger Guidelines, some cases are eligible for a fast-track review. Even though the guidelines lack clarity when defining the cases eligible for the fast track review process, it can be applied in the following situations:
- acquisition of companies located abroad whenever the target has negligible operations in Brazil;
- acquisition of a Brazilian-based company, provided that the acquirer is not active in Brazil or has negligible operations in the country;
- new entry through joint-ventures, provided that there is no horizontal or vertical relationship between the parties to the transaction;
- acquisition of a franchisee by his respective franchisor, in cases not resulting in changes in the control over the most important market decisions;
- increase of interest in a company without changing the previously existing control;
- transactions resulting in low combined market shares with evidently negligible impacts on competition;
- vertical integration transactions involving companies with low market shares in the vertically integrated markets;
- transactions in which any of the notifying parties’ group has registered an annual gross turnover of less than 400 million reais in Brazil in the last fiscal year; and
- other simple cases, at the authorities’ discretion.
Notwithstanding the foregoing, the agencies are empowered to convert, at their discretion, fast track proceedings into ordinary ones, thus requiring a full analysis of a given merger. Even though the exceptions provided by the Guidelines are not clear, the following cases can be identified:
- conglomerate mergers, since certain transactions may reinforce the parties’ market power (eg, through a combination of technology or financial resources);
- a transaction involving either markets for new products or ‘incipient’ markets;
- acquisition of an additional stake in a company, even without changes in the de jure control but resulting in changes in the de facto control;
- certain acquisitions of companies located abroad, whenever potential competition is likely to exist; and
- transactions involving markets with either considerable barriers to entry, high concentration levels or any other competition concerns.
- 22.Are there special rules applicable for public takeover bids or for corporate restructuring under bankruptcy procedures?
- 23.Can the authority be consulted on a no-names basis for guidance on notification requirements? Is this practice useful?
- 24.What are the risks if the parties do not file, if the transaction is closed before clearance or if notification is untimely? What penalties can be imposed and on whom? What is the highest fine imposed to date for failure to file?
Late filing may result in fines ranging from approximately US$35,000 to US$3.5 million. Although in special circumstances higher fines can be imposed, our experience shows that fines usually range from US$35,000 to US$350,000. We are not aware of any fines exceeding US$500,000.
The review process, confidentiality and the role or influence of third parties
- 25.What are the investigative powers of the authority?
The authorities have a wide range of investigative powers. In general, they usually issue information requests in writing to be answered within a certain period of time. It is worth noting that these inquiries are not sent only to the parties to the transaction but also to suppliers, customers and competitors. CADE, SEAE and SDE also have the power to request other documents or information at their sole discretion. As mentioned in question 19, any requests are deemed to suspend the authorities’ deadline to complete the review.
- 26.Are there confidentiality rules to protect sensitive proprietary information provided to the authority and what procedure must be followed for confidentiality to apply?
As a rule, proceedings and case records are public, except only for documents or information to which a confidential treatment request is granted by the authorities. However, sensitive information such as the agreements, value of the transaction, sales, suppliers and customers, turnovers, trade secrets and others, are usually granted with confidential treatment when requested by the parties.
- 27.Is notification and its content publicised?
As a general rule, SDE publishes an announcement with a summary of the proposed transaction in the Official Journal requesting interested parties’ comments. Among others, any customer, competitor, consumer or consumer association can claim to have an interest in order to participate in the proceedings. In practice, third parties may intervene at any stage of the merger review.
- 28.Are there agreements in place to exchange information with foreign competition authorities? Must the authority seek a waiver from the transaction parties to disclose confidential information submitted in their filing?
Yes, CADE has entered into agreements with Argentina, Canada, Portugal, the EU, the US and the Mercosur member states. Although there is no rule expressly providing for this possibility (which is technically required), as the proceedings and case records are public, the authorities may claim that they are entitled to exchange information with foreign authorities without the need for any waiver from the parties. Nevertheless, we are unaware of any case in which Brazilian authorities exchanged information related to cases under their investigation with foreign ones. In our view, Brazilian authorities are not empowered to exchange information with foreign authorities regardless of whether such information is of a confidential nature or not.
- 29.As a matter of practice, how do the authorities investigate a transaction? Whom do they consult? What weight, based on your experience, does the authority give to the information provided?
The authorities usually rely on the information provided by the parties within the form questionnaire to analyse the transaction. However, the extension of the investigation is subject to the authorities’ discretion and they are used to issue information requests to customers, suppliers and competitors. We must say that the information received is of great importance for the review proceedings.
- 30.What rights do third parties such as competitors, suppliers or customers have to intervene and participate in the investigation process, including rights to access the investigation file?
Third parties may intervene at any stage of the merger review, with access to all non-confidential information available in the case records. Third parties are also allowed to provide information, submit motions and arguments against or in favour of the transaction.
- 31.Can third parties appeal clearance decisions, and has this ever happened successfully?
CADE’s decisions are not subject to appeal at the administrative level. However, third parties can challenge the decision in court.
- 32.In a transaction that appears to raise competitive concerns, is it recommended to consult the authority prior to filing and, if so, why?
No. There are no formal prior consultation procedures and the authorities do not normally participate in informal consultation about a proposed transaction.
- 33.Does the authority and its staff share its concerns about a transaction with transaction parties at each stage of review? How can parties productively participate in the evaluation and decision processes?
Usually the parties can infer which are the main concerns of the authorities from the questions included in the information requests issued by them. In addition, SEAE’s and SDE’s concerns are disclosed when they release their reports on the transaction, which takes place before the final decision by CADE. The authorities are not accustomed to inform the parties about the nature of their main competitive concerns, but they may indicate to the parties these concerns in informal discussions about the case. Therefore, except for simple cases it is extremely productive to interact with the authorities during the analysis of the case.
- 34.Are there published guidelines for merger analysis?
There is a Joint Directive enacted by SEAE and SDE, the Horizontal Merger Guidelines, which is used for merger reviews in general. The English version of such Directive is available at www.seae.fazenda.gov.br > English > Economic Guidelines > Joint Directive enacted by SEAE/SDE No. 50 of August 1st, 2001 (SEAE/SDE Horizontal Merger Guidelines).
- 35.What are the prevailing theories of competitive harm and analysis, and how are they typically applied?
The Brazilian Constitution and the Competition Act protect free competition and consumer welfare, among other important values that support social justice. These principles are substantially similar to the ones applicable in the US and the EU, although we must say that they are used only as general statements to guide the application of the law. In their merger control review, the authorities will establish whether the transaction is able to create or strengthen a dominant position so as to enable the relevant parties to behave independently from the pre-existing competitive constraints in the market. Although this analysis relies on similar methodological tools as those used in the US and in the EU, it has been much less rigorous that the usual standards used in these regimes. As a result, Brazilian authorities usually accept higher levels of concentration than the authorities of the US and EU.
- 36.Are there safe harbours and what are they?
According to the Horizontal Merger Guidelines, transactions resulting in a market share lower than 20 per cent of the relevant market are granted a simplified procedure and are cleared without further investigations. Nevertheless, CADE has the discretion to review transactions and its ability to do so is not limited by any fixed level of market concentration.
- 37.To what extent are economic efficiencies and non-competition issues taken into account in the review process?
Although the Brazilian Constitution and the Competition Act provide that economic efficiencies and other social values should be considered, CADE’s case law shows that very little weight is given to them for the purpose of the analysis of mergers.
- 38.Can remedies be negotiated, and, if so, at what stage in the process? How are they enforced?
The imposition of conditions or negative covenants, or both, can be negotiated and agreed between the parties and CADE, before the decision is made. CADE and the parties may enter into a performance agreement (compromisso de desempenho) under which CADE will monitor the implementation of the remedies by the parties.
- 39.How common are negotiated remedies? Can negotiated remedies be challenged by third parties?
Please note that there is no standard procedure on this matter and the negotiation may take place at the discretion of CADE. For instance, according to some sources the approval of the joint acquisition of Ripasa by VCP and Suzano was negotiated between the parties and CADE, and a corporate structure was created to keep Ripasa operating as a production plant without the direct influence of its new controllers. In addition to that, the Ripasa trademark had to be sold to a third party as a result of this negotiation. As mentioned above, clearance of the Owes Corning/Saint-Gobain and Sadia/Perdigão transactions were only possible due further negotiations with CADE.
- 40.Is there a vehicle for reconsideration by the authority of its decision? If so, please describe and provide recent examples where reconsideration led to a revised outcome.
The parties may request CADE to re-examine the transaction if there are new facts or undisclosed favourable documents come to light. However, considering that CADE itself is responsible for the review, usually these reviews are not able to change on the merits of the original decision.
Recently, CADE dealt with a reconsideration request in the Cosan/Shell case. In 2009 Shell tried to acquire Cosan’s subsidiary Jacta Participações S.A. Approval was granted but conditional to the sale of the Jacta’s tangible assets, a sale which the parties failed to comply with within the term provided for in the decision. As a result, the parties requested the re-examination of the decision contending that new facts had come to light requiring a modification of the decision. CADE, however, understood that the request was not grounded and dismissed it. This case may become the first one to have its approval revoked, if the parties do not comply with CADE’s decision.
- 41.Can a decision from the regulator be appealed and if so what is the timetable for judicial review to take place?
Yes. CADE’s decision is final at the administrative level and cannot be changed or altered by any other administrative authority. However, the parties may challenge the administrative decision at court, but doing so can be a burdensome and time-consuming process. There is no timetable for a judicial review and it may take several years like any other litigation in Brazil.
- 42.What has been the most important challenged decision in the past five years that has been overruled and how often generally do appeals result in reversal?
There have only been a few decisions challenged at court. Most of the disputes are related to procedural aspects rather than the merits of transactions. The most emblematic case in which a decision of CADE was challenged at court is the acquisition of Garoto (a chocolate manufacturer) by Nestlé. In this case the lower court ruled in favour of Nestlé and declared that the transaction had been subject to tacit approval. In order to achieve this understanding, the court held that CADE’s information requests were groundless and not supported by reasoned decisions. As such, the requests were disregarded and the court concluded that CADE had lost the 60-day term provided for the analysis of the case. However, the Court of Appeals has recently overruled the lower court’s decision and held that even though CADE did not lose the term provided for the conclusion of the analysis, it failed to consider the new elements of fact brought by the parties in the request for reconsideration. For that reason, the court ordered CADE to re-examine the transaction and grant a new decision. CADE has appealed against this decision and the case is still pending.
- 43.When reviewing decisions from the competition authority, do courts restrict themselves to procedural aspects, or can they review the substance of the authority’s analysis?
There are theories that support both approaches and there is a lot of discussion ongoing. At this moment, it is impossible to know which position will be adopted by the courts, but there is a trend that suggests the judicial debate be limited to procedural aspects related to CADE’s decision.
- 44.Briefly highlight any notable merger control decisions rendered over the past twelve months.
CADE has recently approved a merger-to-monopoly in the magazine distribution market in Brazil, involving the acquisition of Fernando Chinaglia, the previously sole independent national magazine distributor in Brazil, by DINAP, the magazine distribution company owned by Editora Abril, the dominant magazine editor in Brazil. The case was cleared through the negotiation of a performance agreement, under which DINAP undertook to sell Fernando Chinaglia’s two branches in São Paulo and Rio de Janeiro, and also to perform a series of behavioural commitments in the magazine distribution market. The decision is facing opposition by other magazine editors at the administrative level.
On July, 2011 CADE approved the Sadia/Perdigão transaction after a two-year review. The approval of the transaction was conditional to the execution of a performance agreement (“TCD”) by means of which CADE set a number of restrictions in order to mitigate the detrimental effects of the merger in the market, which included both structural and behavioral remedies. BR Foods will be required to divest up to 12 brands and related assets, 10 food-processing plants, 8 distribution centers, 2 pork and 2 poultry slaughterhouses, 12 chicken farms; 2 poultry hatcheries and 4 animal food mills. In addition, BR Foods will be obliged to hand over contracts with rural producers in its supply chain and shall also be prohibited to provide for any kind of exclusivity on the agreements with retailers. Furthermore, BR Foods will be required to suspend the use of Perdigão, one of its main brands, on some products for three to five years as well as its Batavo brand on other products for the period of four years. BR Foods is also prohibited from using other existing brands, as well as creating new brands, to compete in the markets affected by the suspension for a period of 5 years.
- 45.Update and trends
As mentioned, the Brazilian merger control regime may be subject to a significant reform in the near future. The Brazilian House of Representatives has recently passed a legislative bill reforming the Brazilian Competition Act in order to introduce a suspensory regime, under which the parties will not be allowed to close the transaction before clearance.
On December 2010 the bill was approved by the Senate with some changes and amendments from the original text. The bill has now returned to the Brazilian House of Representatives to be reviewed and finally voted. The legislative process can take many months to be concluded. Nevertheless, there seems to be a consensus among government, competition authorities and congressmen that our post-merger system is not appropriate and needs to be replaced by a pre-merger one, more aligned with the US and EU regimes.
CADE’s recent decision blocking the transaction involving the purchase of Cimentos Tupi S.A. (“Tupi”) by Polimix Concreto Ltda. (“Polimix”) showed how important is the legislative reform. Pursuant to this decision, CADE restated that the parties must reestablish the market conditions at a pre-operation status. However, Polimix sold some of the assets involved in the transaction in the course of the analysis and before CADE’s final decision. As a result, it might become unfeasible for Polimix to entirely comply with CADE’s determination to reestablish the market conditions at a pre-operation status.
© Law Business Research Ltd 1998-2012. All rights reserved.
Company No.: 03281866
IMPORTANT: Please read our Terms & conditions.
W11 1QQ, UK
