Brazil: The Enactment Of The New Brazilian Competition

Law: An Important Shift

Last Updated: 26 August 2013
Article by Barbara Rosenberg
Barbosa, Mssnich & Arago Advogados

http://www.mondaq.com/brazil/x/253956/Antitrust+Competition/The+Enactment+O
f+The+New+Brazilian+Competition+Law+An+Important

The year of 2012 was key for the modernization of the antitrust law and policy in Brazil: after
several years in Congress under discussions and amendments, the new Brazilian Competition
Law (Law No. 12.529/2011) entered into force on May 29, 2012.
Among the several changes brought by the new Law, the main was the adoption of a pre-merger
review system, which incorporated a suspensory obligation prior to closing. This new legal
framework changed the dynamics of the antitrust review process not only to the antitrust
authority (the Economic Council for Administrative Defence, or CADE), which became bound to
a deadline to review merger cases, but also to companies that now have to deal with bar on
closing obligations during the merger review process.
i. Pre-merger review
Since May 29, 2012, parties to notifiable transactions in Brazil are not allowed to close or
implement agreements, or, in merger cases, to integrate their businesses, before CADE issues its
final decision regarding the competitive effects of the transaction. The parties cannot align their
behavior in the marketplace either, and they should maintain their business operations as fully
independent as possible until CADE's final decision is issued. In a nutshell, by adopting a premerger review system, Brazil aligned its practice to the one existing in the mature jurisdictions,
such as the United States of America and Europe.
The Brazilian antitrust authority expects parties involved in a notifiable transaction to hold their
respective activities (including, for instance, facilities, plants business and commercial practices)
separate until CADE's final authorization is given. As such, during CADE's review, the parties
are not allowed to (i) transferring assets, (ii) exchanging competitive sensitive information that is
not reasonably necessary to the negotiation of the agreement or transaction, and (iii) exercising
any type of decisive influence over another's business and commercial decisions. The definition
of competitive sensitive information may vary from case to case and from industry to industry
and may require a specific assessment in the context of the agreement or transaction under
analysis, but examples of competitive sensitive information generally include information
regarding prices, quantities, profitability, costs, payment terms and conditions, intellectual
properties rights, current or prospective clients and suppliers, research and development projects,
current or future marketing and strategic plans, product development plans or trade secrets. As a
consequence, parties should be especially cautious as to competitively sensitive information that
is to be exchanged for purposes of planning the business integration, including in the course of

the due diligence process, in order to avoid these risks during preliminary negotiations and
during the transition period between signing and closing.
If the parties do not comply with the suspensory obligations, incurring in the so-called gunjumping prior to closing, the transaction will be considered void the parties shall be subject to
fines ranging from BRL 60 thousand to BRL 60 million, in addition to possible cartel
investigations.
ii. Timing of the review
With respect to the timing of the antitrust merger review, CADE has a maximum deadline of 240
days, which can be extended by CADE in complex mergers to up to 330 days (11 monts), to
review the notified transactions. Even though the new Law does not explicitly set forth that the
transaction is automatically cleared if the review period is exceeded, CADE's General Attorney
has issued Opinion No. 17/2012 stating that such deadline is final.
The practice so far has shown that CADE has approved fast track cases in less than 30 days as of
the moment of the filing, provided that the notification form is considered complete. After
clearance, parties shall wait additional 15 days for a possible appeal prior to closing. Therefore,
closing schedules should allow for 30 to 45 days for clearance of the so-called fast track
transactions. The review period of more complex cases (transactions that involve concentrations
of more than 20% market share) cannot be precisely estimated and depend of a case by case
analysis.
In the context of a pre-merger review, it is important to have in mind that the more complete the
notification form, the larger the chances of having the case cleared quickly. Under the old
system, parties normally provided limited information and waited the authority to request any
additional data it deemed necessary. Since the enactment of the new Law, the companies have to
take extra care in the completeness of all information that is being provided because each request
for additional information from the authority can result in delay in the review process and thus in
the consummation of the deal. The notification filing forms provided by the new law are more
complex in terms of the information requested and it is important to follow the requests therein
as strictly as possible to have the deal cleared in a reasonable timing. One additional difference is
that the parties must now present any side documents prepared with the purpose of approving the
transaction, including those with market data and assessment of the target company, among
others. This requires additional care in the preparation of the documents.
Finally, one should also note that there is no longer a deadline to submit the transactions to
CADE; notifiable transactions must be submitted for review prior to closing and preferably after
signing of a binding document, even though CADE has been accepting to review non binding
documents, provided that some agreement has been executed between the parties.
iii. Notifiable transactions
The New Competition Law also changed the thresholds of notifiable transactions. According to
the new Law, a deal has to be submitted to CADE's review when (i) at least one of the groups

involved registered an annual gross revenues (turnover) or a business volume above BRL 750
million in the year preceding the proposed transaction, and (ii) another group involved registered
gross revenues (turnover) or a business volume above BRL 75 million in the year preceding the
proposed transaction.
Article 90 of Law No. 12.529/2011 provides that a concentration shall be deemed to occur when
(i) two or more previously independent companies merge; (ii) one or more companies acquire,
directly or indirectly, by any means, control or parts of one or more other companies; or (iii) two
or more companies enter into an association agreement, or form a consortium or joint venture.
Given the broad wording of Article 54 of the former Brazilian antitrust law (Law No.
8.884/1994), the attempt of Article 90 of the new law was to give a better guidance of the types
of transactions that need to be submitted to CADE in order to restrict the number of cases
reviewed by the authority. With this in mind, the concept of acquisition of control or parts of one
or more other companies (as stated in item (ii) above) has already been further clarified by
CADEs Resolution No. 2/2012 which states what types of acquisitions triggers mandatory
antitrust filing. This regulation improves the clarity of a significant number of transactions that
needs to be notified to CADE. One should note, however, that this regulation is still not enough
to contemplate companies' concerns and doubts when assessing whether or not to submit certain
transaction to CADE. In this context, the authorities are yet to issue additional clarifications with
respect to the scope of the specific provision regarding "joint ventures" and "association
agreements" (as stated in item (iii) above) given the broad language of article 90 and in view of
CADE's over inclusive decisions regarding the need to notify those kind of agreements under the
old Law No. 8.884/1994.
iv. Other Changes
The new law also brought changes in relation to the administrative proceedings related to
anticompetitive conducts (i.e. cartels) with the aim to improve the enforcement of those
wrongdoings.
An important change concerns the fines imposed on companies convicted for anticompetitive
conducts. While the old law established a fine of 1 to 30% of the gross revenues less taxes of the
company in the year prior to the beginning of the investigation, the new law changed the range of
the fines to 0.1 to 20% of the company's gross revenues of the company, economic group or
conglomerate in the year prior to the beginning of the investigation, and limited the basis for the
calculation of the fines to the business segment in which the wrongdoing occurred. This means
that under the new Brazilian Competition Law the fines are no longer calculated based on the
total gross revenues of the company, but on the revenues of the business segment in which the
conduct occurred. It is still uncertain whether this change of the law will result in more limited
fines to the companies since CADE has still not issued any decision under the basis of the new
Law; the reasonableness of the fine would mostly depend on the geographic scope of the
business segment involved in the wrongdoing.
For individuals, the range of the fines also changed from 10 to 50% of the amount applied to the
company (according to the old antitrust law) to 1 to 20%. The new law also expanded the list of

alternative penalties to individuals including the possibility of debarment from practicing trade
on their own behalf or as a representative of a legal entity for a period of up to five years.
It is worth highlighting that cartel is both an administrative infringement, as well as a crime
under Brazilian law; and that there was an important change in the criminal provision of this
anticompetitive practice. Prior to the enactment of the new law, Article 4 of Law No. 8.137/1990
provided that the penalty for crimes against the economic order was imprisonment from 2 to 5
years or the payment of a fine. The new Law eliminates the possibility of alternative penalties.
Individuals now investigated for cartel crimes are subject to 2 to 5 years' imprisonment and the
payment of a fine. As a consequence, individuals investigated for crimes against the economic
order (such as cartel) no longer have the possibility to terminate the criminal proceedings by
paying an administrative fine to CADE.
The New Competition Law did not bring significant changes to the procedures for signing
leniency and settlement agreements and these two subject are still subject to further discussions
and regulations by the authorities in order to improve the reliability, certainty and clearness of
those tools in the enforcement of cartels investigations in the country.
v. Conclusion
The new Brazilian Competition Law introduced relevant changes, which shall affect the business
environment for companies doing business in Brazil. CADE shall be praised for being able to
review fast cases in short periods even with considerably limited resources. Although there is
still room for improvement, the enactment of the new Brazilian Competition Law was a relevant
step in the development and enforcement of the antitrust policy in the country.
Footnotes
1 The concept of group of companies and control are particularly important in this context for the calculation of the applicable turnover thresholds rules; CADE
substantially expanded these concepts in contrast with those adopted by the old law (Law No. 8.884/1994) with the issuance of new regulations.

2 Associations created for the purpose of participating in public bids have been expressly excluded from the concept of concentration for purposes of merger control.

The content of this article is intended to provide a general guide to the subject matter. Specialist
advice should be sought about your specific circumstances.

Brazil: Brazilian Competition Policy In Global Context:

Achievements And Challenges
Last Updated: 9 April 2014
Article by Eduardo M. Gaban
Tauil & Chequer
http://www.mondaq.com/brazil/x/305780/Antitrust+Competition/Brazilian+Competiti
on+Policy+In+Global+Context+Achievements+And+Challenges

Keywords: competition, antitrust, mergers, Administrative Council for Economic Defence,

CADE, Brazilian System for Economic Defence, SBDC,
Enforcement of antitrust law in Brazil has continued its trend toward consolidation and
evolution.1 Brazil's economic growth has resulted in more complex transactions being submitted
to merger control, as well as more complex and veiled antitrust investigations. In turn, this has
increased the visibility and relevance of the Brazilian System for Economic Defence (SBDC)
and, especially, of the Administrative Council for Economic Defence (CADE), the country's
main antitrust agency.2
According to CADE's 2012 Annual Report, CADE has increased the number of its technical
staff, and given them more responsibility, resulting in a rise in the number of cases analyzed per
year: from 666 in 2005 to 955 in 2012, out of which 825 were merger filings notified under the
old regime and 102 merger filings submitted under the new regime. In the first half of 2013, 82
new proceedings were filed, 158 were ruled on (out of which 59 were merger filings) and only
219 remain under analysis.
In addition to the staff increase, the reformulation and the enhancement of cooperation within the
SBDC (i.e., the Secretariat of Economic Monitoring SEAE, the Secretariat of Economic Law
SDE, CADE's Attorney General Office, and Federal Public Prosecution Office and CADE)
eliminated overlapping activities and significantly reduced the average analysis period of merger
filingsfrom 252 days in 2005 to 48 days (ordinary procedure) and 19 days (summary
procedure), both in 2012.
The depth and strength of the decisions can also be regarded as an achievement. For example,
since the New Brazilian Antitrust Law (Law No. 12529/2011) came into effect, CADE has been
keeping an eye on healthcare markets. This has resulted in significant restrictions being imposed
in some transaction involving the acquisition of hospitals in several Brazilian cities, including
Rede D'Or and Medgrupo Participaes S.A., the veto of the acquisition of Hospital Regional de
Franca by Unimed and the acquisition of Aliana by Qualicorp in the healthcare insurance sector.
Additionally, in May 2012, CADE authorized the assets swap between Brasil Foods (BRF) and
Marfrig Alimentos S.A., in compliance with heavy commitments of selling assets assumed by
BRF involving approximately 35 percent of the parties' production capacity in Brazil comprising
production facilities, distribution centers and an important portfolio of products and brands.3

Also, the authority cleared the transaction between the airline companies LAN and TAM, subject
to the swap with a competitor of some slots and infrastructure in the So Paulo International
Airport and to the exit of one of the worldwide airline company's alliances (One World or
StarAlliance).4
In the steel sector, CADE granted an injunction to prevent completion of the acquisition by the
Brazilian Companhia Siderrgica Nacional (CSN) of additional stakes in its competitor, Usinas
Sidergicas de Minas Gerais S.A. (Usiminas).5 CADE ordered that until a final decision is
rendered and subject to the imposition of fines of Brazilian Real (BRL) 10 million plus BRL
10,000 per day of violation, CSN would not be allowed to appoint any member to the board of
directors or any other management board of Usiminas. Cade also ordered that no company of
CSN's economic group should have access to competitively sensitive information or exercise any
management or political rights over Usiminas (e.g., voting in the general shareholders'
meetings). In addition to this, CADE imposed restriction in the creation of a partnership between
Usiminas and nineteen distributors of flat steel, eliminating an exclusivity clause set forth in their
agreement.
While still under the old regime, CADE executed some Agreements to Preserve Reversibility of
the Transaction (APROs) in important transactions in order to maintain the competitive
environment, as well as to keep the parties independent until a final decision was reached. This
was the case in the merger between the Brazilian airline companies Gol and WebJet,6 as well as
the transaction concerning the acquisition by Diagnsticos da Amrica S.A. (DASA) of control
over MD1 Diagnsticos S.A.,7 and the subsequent acquisition by AMIL Group of participation
on DASA's shares in the health assistance and diagnosis services sector.
Under the new regime, CADE has entered into the first merger control settlement agreements
(ACCs) in transactions that raised competition concerns, as a condition for their clearance under
the Law No. 12529/11. The first such case refers to the acquisition of Mach by Syniverse. During
examination, the General Superintendence found that the transaction would result in high
concentration in the GSM data clearing and Near Real Time Roaming Data Exchange
(NRTRDE) markets, which are technological services provided to mobile telecommunication
companies for the charging of roaming. To remedy competition concerns, Mach and Syniverse
proposed executing the agreement, through which they undertake certain obligations to remove
any anticompetitive outcomes from the transaction.
In the second case, involving Ahlstrom Corporation and Munksj AB, CADE concluded that
there was high concentration in the pre-impregnated decorative paper (PRIP) market and in the
heavy abrasive paper market, and that there were neither prospects of new entrants into the
sectors nor sufficient firms able to compete in these markets. Therefore, the sale of an industrial
unit of Ahlstrom was established as a condition to the deal.
CADE also cleared complex transactions, e.g., the merger between two big retailers Casas Bahia
and Ponto Frio, acquisition of Skype by Microsoft, several acquisitions in the meat sector by JBS
(although CADE is monitoring the market by means of monthly reports sent by the company).

Interestingly, CADE cleared the transaction between airline companies Azul and Trip, on the
condition that by the end of 2014, the flight share agreement (code share) that Trip has with
TAM be terminated as well as the use with intensity at least of 85 percent of their scheduled
takeoffs and landings at the Santos Dumont airport, located in Rio de Janeiro. However, this case
demonstrated that CADE is carefully reviewing and verifying all the information provided by the
applicants, as the authority imposed an R$3.5 million fine (out of a maximum of R$5 million) on
the companies for presenting misleading information. This kind of penalty had already been
provided by former Law No. 8884/94, although there are no decisions that are worth mentioning
in this sense. The penalty was maintained in Law 12529/2011, and only now has CADE applied
a strict analysis of accuracy and completeness to information provided by the parties and
demonstrated its willingness to punish any minimal evidence of misleading information.
In the case Azul/Tryp, for instance, CADE imposed such a high fine because the parties did not
provide information about the existence of a code share agreement with TAM. This information
came out during complementary discovery by CADE and was determinant to the imposition of
restrictions to the transaction.
The second, and more recent case of misleading information involves Lauriate Group and the
Brazilian private university Anhembi Morumbi, which were fined in R$4 million for hiding
information of their economic groups, which would show that a Lauriate Group's members were
already active in the educational sector. The transaction involved the rise of equity interest of
Lauriate Group in the managing company of Anhembi Morumbi from 51 percent to 100 percent.
The first precedent of misleading information concerned the transaction between the companies
Cruzeiro do Sul Educacional S.A. and ACEF S.A., in the distance learning sector. According to
CADE, the parties did not inform an accurate number of courses offered and the number of
students enrolled. CADE imposed a fine of R$200,000.
Under the new regime, CADE has also focused the analysis of merger filings on consolidating a
restrictive and objective approach in regard to the notification thresholds, as well as
acknowledging the need to enact regulations concerning some concepts of Law No. 12529/11,
such as the "associative agreements" (including distribution agreements, consultancy agreements,
partnerships in general, service agreements, etc.) that fall within the scope of antitrust law, as
well as the concepts of control and relevant influence for the purposes of submitting a transaction
to merger control.
CADE also evolved controlling behaviors, such as cartels and unilateral conducts; however,
society is still waiting for a development in this sense, be it in terms of speedy to conclude the
cases, be it in terms of willingness to face more cases.
All of the changes to the SBDC that have taken place are still not enough to put Brazil in the first
tier in terms of antitrust enforcement and competition culture. Cultural and latent problems, not
exclusively related to competition law and to the SBDC, but rather related to Brazil as a whole,
have made the challenge that much greater.

In this regard, it is important to recognize that competition law in Brazil is still less than 20 years
old. Competition culture has not yet been fully established at the academic or governmental
levels, let alone the business environment or society as a whole.
The tripod underlying the Brazilian Competition Policy (merger control, behavior control and
competition advocacy) is still being developed. In merger control, CADE is facing a quite settled
case law and methodology, which, in addition to the institutional maturity, gives the society the
desired predictability of whether a transaction should be submitted to CADE and whether there
will be difficulties for unconditional clearance.
CADE has continued to develop its efforts at behavioral control. This can be observed by the
number of cases it has ruled on, the level of penalties applied and the outcomes of the judicial
decisions when CADE's rulings have been challenged. However, CADE needs to keep
developing and refining its investigations in order to signal to society that it is not worth the risk
to violate antitrust laws.
For new cases, the leniency program is still something of an unknown. It brings little confidence
because Brazil's legal tradition is not used to granting benefits to criminals who, in admitting to
and giving information on their crimes, assist in the conviction of other possible wrongdoers.
However, leniency agreements are useful for the authorities because they make it possible to
obtain information that would be very hard to obtain in the normal course of an investigation.
Additionally, the unilateral conduct cases are not a small challenge to be faced. CADE has not
many cases of conviction, but stared to fix its position, what was seen in the case SKF (2013),
the first conviction for resale price maintenance. The case involving Banco do Brasil and
exclusive dealing in payroll loans (2012) can be also regarded as an achievement. More cases of
unilateral conducts, including those related to state-owned enterprises, might arise and lead
CADE reinforce its mandate for free competition and a level playing field regime within the
Brazilian markets.
CADE is commencing to define its role on competition advocacy, which might be shared with
SEAE. Problems related to taxation could trigger this very important pillar of competition law in
Brazil. Both of them shall think antitrust in a broader manner in order to contribute to social
welfare as much as possible. The Brazilian society is anxious for a support of the expert on
competition to help the country become more competitive and fair.
Footnotes
1 Competition and Antitrust are synonyms in Brazil; thus this article uses either Competition Law or Antitrust Law.
2 The SBCD, the Brazilian antitrust system, is composed of three administrative entities that are jointly responsible
for the antitrust enforcement: (i) Secretariat for Economic Law of the Ministry of Justice (SDE); (ii) Secretariat for
Economic Monitoring of the Ministry of Finance (SEAE); and (iii) Administrative Council for Economic Defense
(CADE).
3 Brasil Foods S.A./Marfrig Alimentos S.A. Concentration Act No. 08012.011210/2011-67. Introduced in November
2011, and cleared in July 2012.

4 TAM S.A./Lan Airlines S.A. Concentration Act No. 08012.009497/2010-84. Introduced in September 2010, and
cleared in December 2011.
5 Companhia Siderrgica Nacional/Usinas Sidergicas de Minas Gerais S.A. Concentration Act No.
08012009198/2011-21. Introduced in September 2011 and cleared in April 2012.
6 Webjet Linhas Areas S.A./VRG Linhas Areas S.A. Concentration Act No. 08012.008378/2011-95. Introduced in
July 2011, and cleared in October 2011.
7 MD1 Diagnsticos S.A./Diagnsticos da Amrica S.A. Concentration Act No. 08012.010038/2010-43. Introduced
in September 2010, and cleared in October 2011.

Learn more about our Antitrust & Competition practice.

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Copyright 2014. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer
Brown is associated. All rights reserved.
This article provides information and comments on legal issues and developments of interest.
The foregoing is not a comprehensive treatment of the subject matter covered and is not intended
to provide legal advice. Readers should seek specific legal advice before taking any action with
respect to the matters discussed herein.

The New Competition Law in Brazil:

Challenges Ahead

Jose Antonio Ziebarth, Nov 30, 2011

https://www.competitionpolicyinternational.com/the-new-competition-law-in-brazil-challengesahead/
The present article aims to outline the latest developments of Competition Law and Policy in
Brazil. The so-called Brazilian Competition Policy System has become increasingly more active
over the past decade. Since the beginning of the 2000s, a commodities boom has fueled strong
growth and lowered poverty across Latin America. Once hobbled with high inflation and highly
susceptible to worldwide crises, Brazil now has wide foreign reserves and a rousing consumer
market. Furthermore, Brazil achieved an investment grade status for its sovereign debt in 2008
and 2009.
The BCPS is internationally recognized for creative initiatives to further increment the
effectiveness of their enforcement activities, including a strong and creative cartel enforcement
program and efforts to streamline merger review procedures.
This article aims to provide a brief perspective and commentary on such developments. In order
to do so, it will focus on the following topics: (a) the foundations of competition policy in Brazil;
(b) an overview of the current Brazilian Competition Policy System; and (c) the enactment of the
new legislation and its main changes

Brazil - Law & Practice

Contributed by Barbosa, Mssnich & Arago

Contributors
http://www.chambersandpartners.com/guide/practiceguides/location/240/6418/1323-200

Barbosa, Mssnich & Arago Advogados can offer clients support in all matters related to
competition law. The firm advises on competition issues, and represents clients in administrative
proceedings before the CADE, Brazils competition authority, and in litigation before the courts.
The competition practice has offices in Rio de Janeiro, So Paulo and Braslia.
The authors

Partner Barbara Rosenberg is a highly competent and respected competition lawyer. She is a
Director for Competition at IBRAC and Vice-Chair of the Intellectual Property and Competition
Committee of the International Chamber of Commerce. She has a Doctorate in Economic
Financial law from the University of So Paulo, and has also authored numerous articles on
Brazilian competition law.
Jos Carlos Berardo is a Partner with the competition team at Barbosa, Mssnich & Arago
Advogados. He is a Council member of IBRAC and Co-Chair of the IP & Competition
Commission of the Brazilian Association of Intellectual Property (ABPI). He has a Masters in
the Economics of Competition law from Kings College, London.

Legislation and Enforcing Authorities

Merger control legislation

Law no. 12,529/2011 sets forth the main rules for merger control in Brazil. Regulations no. 1 and
no. 2, issued by the enforcing authority the Administrative Council for Economic Defense, or
Conselho Administrativo de Defesa Econmica (the CADE) also contain relevant substantive
provisions. Law no. 12,529, in force since May 29, 2012, replaced Law no. 8,884/1994, and
introduced a suspensory merger control regime in Brazil.
^ Return to Top

Authorities
The authority enforcing merger control legislation in Brazil is the Administrative Council for
Economic Defense (Conselho Administrativo de Defesa Econmica, usually referred by its
Portuguese acronym, CADE). Within the CADE, there are two decision-making bodies: the
Superintendence General (SG) and the Board (Tribunal) of the CADE, comprising six
Commissioners and the Chairman Commissioner.
^ Return to Top

Recent changes to legislation

Until May 28, 2012, Brazil was one of the few countries that still adopted a post-merger
notification system (sometimes referred to as a non-suspensory regime). This regime was
replaced by a suspensory regime when Law no. 12,529 replaced Law no. 8,884. No major
significant change is expected to take place in the near future.
Since then, the CADE has issued relevant regulations on both procedural and substantive rules:
Internal Rules (Resolution no. 1/2012); Definition of Group of Companies, Fast-Track
Procedure, Notification Form and Partial Acquisitions (Resolution no. 2/2012);
Recommendations for Economic Technical Opinions (Resolution no. 3/2013).

The business community expects the CADE to issue new regulations in the near future on: new
horizontal and vertical merger guidelines; resolutions on the definition of control; associative
agreements; and the sale of assets, amongst others.
^ Return to Top

Additional legislation
There is no specific legislation for merger control involving foreign transactions or investments
in Brazil.
Although Law no. 12,529 applies to all economic sectors without distinction, in April 2012, the
Brazilian Central Bank issued specific regulations Circular no. 3,590/2012 and Communication
no. 22,366 establishing merger control rules for transactions amongst financial institutions,
pursuant to Law no. 4,595/1964. The CADEs powers to enforce general merger control rules in
the financial sector have been subject to a long-standing litigious dispute. In 2010, the Superior
Court of Justice (Superior Tribunal de Justia) delivered a split decision (see case Recurso
Especial no. 1.094.218/DF) stating that the Central Bank had exclusive powers to enforce merger
control rules, but the CADE appealed to the Brazilian Supreme Court (Supremo Tribunal
Federal); as the final decision is still pending, both authorities (the CADE and the Central Bank)
believe they have the power to enforce merger control rules.
Law no. 12,529 has not explicitly changed the legal provisions applicable to competition law in
regulated telecommunication markets. These provisions state that merger control filings should
be submitted to the CADE by means of the sector regulator and that the regulator should
control, prevent and repress antitrust breaches, respecting the CADEs powers. However, the
survival of these provisions following Law no. 12,529 is still subject to discussion.
^ Return to Top

Enforcement
The enforcement record of the CADE has been consistently high, even in foreign-to-foreign
deals. (see; Foreign-to-foreign transactions).

Scope of Control

Relevant transactions
A transaction that is deemed a concentration according to article 90 of the Law 12,529 is
reportable if it has effects in Brazil and meets the jurisdictional thresholds (see; Jurisdictional
thresholds).

A concentration takes place when (i) two previously independent companies merge; (ii) one
company acquires, directly or indirectly, by any means, control or parts of another company; or
(iii) two companies enter into an association agreement, and form a consortium or a joint
venture. Consortia created for the purpose of participating in public bids have been expressly
excluded from the concept of concentration.
A reportable partial acquisition arises if a transaction results in:
(a) the acquirer becoming the largest individual investor of the target;
(b) an acquisition of control;
(c) the acquisition of an interest higher than 20%. (If the acquirer and the target company are
neither competitors nor active in vertically related markets, each additional acquisition of a 20%
interest is also reportable, provided that the interest is acquired from a single seller); or
(d) the acquisition of an interest higher than 5%. (If the acquirer and the target company are
either competitors or active in vertically related markets, any further acquisitions of a 5% interest
in this case are also reportable, irrespective of the sellers.)
Acquisitions of an interest by controlling shareholders are also reportable if they result in an
acquisition of more than 20% of the targets outstanding shareholding, provided that the interest
is acquired from a single seller.
^ Return to Top

Definition of control
The concept of control is not defined in the CADEs regulations, but the CADE seems to be
interpreting it loosely as the concept used to define the controlling shareholder by the Brazilian
Corporations Law (article 116 of Law no. 6,404). According to this specific rule, a controlling
shareholder is identified as holding the ownership of shareholder rights that ensure a majority of
the votes in the companys shareholders' meetings and the power to appoint the majority of the
companys managers. The controlling shareholder will be able to use this power to direct the
business and activities of the company and the functioning of the companys corporate bodies.
In addition to the provisions of the Brazilian Corporations Law, a broader concept of "control"
would also encompass the ability of one party to exercise significant influence over relevant
competitive decisions of another company. The CADE has been interpreting this so as to include:
(a) rights to appoint managers; (b) rights to determine or influence commercial and sensitive
competitive policies; or (c) rights to veto any commercial and sensitive competitive-related
decisions. However, this broader concept of control is relevant only for the assessment of the
merits of the reportable cases; the acquisition of significant influence does not entail a
concentration and thus does not render a merger reportable (see Merger Case no.
08700.007119/2012-70).

According to the CADE, for the purposes of merger control, a group of companies, is understood
to mean that: (a) all the companies are subject to a common control; and (b) any other
companies in which the companies subject to a common control hold a direct or indirect interest
higher than 20%.
According to the CADE, in the case of investment funds, a group of companies may be: (a)
any fund in which an investor holds more than 20% of the funds quotas; (b) a group where all
the funds are managed by the same manager (gestor), even if the investors do not have a stake in
any of these other funds; (c) the manager (gestor) of the investment fund itself; (d) the group of
any investors holding at least 20% of the quotas of any other fund managed by the same manager
(gestor); and (e) any portfolio companies in which the funds shareholding is 20% or greater.
This definition of a group of companies as comprising all sorts of possible relations in
connection with investment funds is entirely new and a substantial departure from the CADEs
past practice. Under the previous merger review regime, the relationship between the investor
and the investment fund was investigated (and considered, or discarded, for the purposes of the
definition of a group of companies and the assessment of competitive overlaps or vertical
relationships) on a case-by-case basis, considering the powers granted to the investor over the
funds investment decisions and its influence over portfolio companies/investments by the funds
statute. Even though some cases involving investment funds have been reviewed under Law no.
12,529, there is still a lot of uncertainty in the enforcement and application of these rules in some
circumstances.
Acquisitions of an interest higher than 20% are reportable if the acquirer and the target company
are not competitors nor active in vertically related markets (each additional acquisition of a 20%
interest is also reportable, provided that it is sold by a single seller). If the acquirer and the target
company are either competitors or active in vertically related markets, however, the threshold for
partial acquisitions is 5% any further acquisitions of 5% or over are also reportable
(irrespective of the seller(s)).
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Jurisdictional thresholds
Reportable transactions have: (i) at least one of the groups involved with an annual gross revenue
(turnover) or total volume of business in Brazil (including exports to Brazil), greater than
BRL750 million (USD375 million) in the latest financial year; and (ii) another group involved
with an annual gross revenue (turnover) or total volume of business in Brazil greater than BRL75
million (USD37.5 million). These thresholds apply to all transactions and there are no special
thresholds for specific sectors. Under article 88, 1 of Law no. 12,579, the values contained in
the jurisdictional thresholds can be set forth by the Ministries of Finance and Justice (Joint Order
no. 994/2012).
The sum of the total turnover (revenues) of all group entities in Brazil (i.e. associated with sales
to customers located in Brazil) including those related to investment funds should be
accounted for in order to verify whether a transaction must be notified.

Note that the Brazilian authorities in the past have not accepted the allocation of turnover on a
proportional basis (i.e. according to the entities interest in the company with these sales) and, for
that purpose, the total turnover is generally taken into consideration if a company or fund is
deemed to be part of a group, irrespective of the actual interest held in this company or fund.
For accurate conversion purposes, please use the currency exchange rate provided by the
Brazilian Central Bank (BACEN), for the last business day of the preceding year.
The jurisdictional thresholds in Brazil are based on annual gross revenue (turnover) or on the
total business volume in Brazil, including exports to Brazil, in the previous financial year.
Foreign currency must be converted to Brazilian Reals (BRL) according to the currency
exchange rate provided by the Brazilian Central Bank, as set on the last business day of the
respective financial year.
As the thresholds are based on the groups involved in the transaction, the targets turnover or
volume of business is irrelevant for the reportability assessment, as the total of the sellers group
turnover or volume of business should be taken into account. There are no thresholds in Brazil
based on the value of the assets or transaction.
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The local effects test

The competition law, with respect to both mergers and anticompetitive conduct, is only
enforceable regarding transactions that occur in Brazil or that may produce effects in the local
territory (see Merger Case no. 08700.001204/2013-13).
If the target is active in a market that includes Brazil, but has no local sales or assets, the CADE
is likely to consider the transaction as reportable because of its potential local effects; there is no
de minimis rule.
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Market share jurisdictional thresholds

Law no. 12,529 eliminated the market share notification threshold.
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Joint ventures
The concept of a concentration in Brazil includes a general reference to joint ventures, but there
are no particular rules regarding their types or specific thresholds. The fact that the law also
defines an associative agreement as a type of concentration supports the contention that there
is no clear distinction on which types of joint ventures are reportable.

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Notification
It is mandatory to notify transactions that: (i) qualify as a concentration; (ii) have effects in
Brazil; and (iii) meet the jurisdictional thresholds. Failure to notify may result in the imposition
of fines and also in the winding-up of the transaction. The CADE has powers to request the
notification of any transaction that does not meet the jurisdictional thresholds within a year of its
closing.
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Requirements to suspend completion

The parties are prohibited from closing (consummating) the transaction and from modifying
their competitive relationships in any way prior to the CADEs final decision.
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Exceptions to the suspensive effect

There are two exceptions to the closing prohibition: public bids for the acquisition of shares of
listed companies, and acquisitions of firms in financial distress.
In the case of public bids, closing (the actual acquisition of shares) can occur, but the buyer is
prevented from exercising any political rights over the acquired shares until the CADEs final
decision.
The parties may also request a partial derogation from the suspensive effect in cases involving
firms in financial distress. The parties, however, have to show that: (i) the derogation is not
capable of causing irreparable harm to the affected markets competitive conditions; (ii) the
measures required for partial implementation of the transaction are reversible; and (iii) the target
will incur substantial and irreversible financial losses if those measures are not adopted prior to
the CADEs decision.
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Foreign-to-foreign transactions
Foreign-to-foreign transactions are subject to merger control in Brazil if they have potential
effects in Brazil.
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Transactions outside jurisdictional thresholds

The CADE has powers to request the notification of any transaction that does not meet the
jurisdictional thresholds for up to a year after the closing.
There is a five-year statute of limitation regarding the CADEs ability to impose administrative
sanctions; the interpretation and scope of applicability of this five-year rule to merger control
was very controversial under Law no. 8,884, with different decisions taken by the Tribunal over
the years. However, this no longer seems to be a big issue, as there is no case regarding the
application of the statute of limitation under the new Law.

Procedure: Notification to Clearance

Deadlines
There are no notification deadlines under Law 12,529. According to the regulations, the parties
may submit a notification preferably after the signing of a binding document and (rather
obviously) prior to closing.
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Pre-notification requirements
Although regulation prefers a notification made on the basis of a binding agreement, they are not
the only method. Several filings are made on the basis of less formal agreements. It is important,
though, that such agreements, even if they are not considered to be binding, contemplate the
structure of the transaction and any provisions that may be deemed as ancillary restrictions to
competition, such as non-compete covenants.
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Responsibility for filing

The law does not specify the parties responsible for the filing. However, the regulations state that
the notifications must be submitted by the following persons whenever possible: (i) in a partial
acquisition or an acquisition of control, by the acquirer and the target company; (ii) in mergers,
by the merging parties; and, (iii) in other cases, by all of the contracting parties.
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Information required
The notification of a transaction to the CADE under the current merger control rules requires
disclosure of information about: (i) the groups involved (e.g. sales, corporate structure,
activities); (ii) the transaction (e.g. a description of the agreement, terms and conditions, amounts
involved); and (iii) the markets in which the groups operate (e.g. definition of relevant market,
supply conditions etc.)
The level of detail of the notification required for each of these topics varies depending on
whether the transaction qualifies as a fast-track case. Fast-track cases generally involve: (i)
market entries; (ii) co-operative joint-ventures; and (iii) low market share cases (<20%).
A complete form requires the submission of additional documents (any presentation, memoranda
or other document prepared for officers or directors that includes a discussion of market
conditions, the competitive effects and the rationale of the transaction) as well as an in-depth
analysis of the affected markets and entry barriers. Fast-track cases use a shorter form.
Any document submitted to a Brazilian authority must be in Portuguese, as such both the
notification and its accompanying documents must be translated (for the latter, the translation
must be submitted alongside the originals or certified copies). The CADE also requests certified
(sworn) translations of documents in foreign languages or, alternatively, if a simple translation is
submitted, that the parties representatives state their responsibility as to the contents of the
translations; the CADE also has powers to request notarizations or apostilles of foreign
documents.
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Failure to notify
Failure to notify, or an infringement of the closing prohibition, can result in: (i) fines ranging
from BRL 60,000 to BRL 60 million; (ii) a decision from the CADE to wind up the transaction;
and (iii) subjecting the parties to investigations of anti-competitive behaviour.
At the time of this submission, there has been only one precedent in which the CADE imposed a
fine of BRL 3 million for gun jumping (see Merger Case no. 08700.005775/2013-19); it is safe to
say that penalties for this type of infringement tend to increase.
Publicity is the rule for the authoritys decisions, with confidentiality of information being the
exception; as a result, penalties and details of the infringement are made public.
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Filing fees
The filing of a notification requires the payment of a filing fee of BRL 45,000 (USD 22,500);
this fee must be paid before the filing, and the payment proof must be submitted with the
notification.
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The review process

The law sets out two main phases for the review of a transaction at the CADE, one at the
Superintendence General (SG) and the other, if required, at the Board (Tribunal) of the CADE.
There is no timeline for each phase, but if the CADE fails to issue a decision within 240 days
(which can be extended for a further 90 days for complex cases) clearance is granted.
The SG initially screens the notification in order to verify if the case qualifies for the fast track or
if there is information missing from the notification form. The SG then determines whether it is
necessary for the parties to supplement the filed notification. If the SG understands that the
notification is complete, it publishes a notice in the Official Journal. Qualifying third parties may
then challenge the transaction or may provide information with which to assist the SGs review
of the case.
Upon the completion of its review of the transaction, which could involve information requests
to third parties (suppliers, competitors etc.), the SG may either grant clearance for the transaction
or challenge it before the Board of the CADE, seeking to impose remedies or to block the
transaction. If the SG grants clearance, a second notice is published in the Official Journal
informing the parties and third parties of the decision. Third parties may challenge the clearance
of the transaction to the Board of the CADE within 15 days of this decision; the CADEs
Commissioners may also request that the Board review a transaction that was cleared by the SG
within 15 days.
As a result, in challenges by the SG or from third parties, or for requests from the CADEs
Commissioners, the transaction is then subject to the review of the Board of the CADE. The
Board then issues a final administrative decision on the merits of the transaction, either for
clearance, the imposition of conditions, or to block the transaction.
Cases that do not qualify as fast-track can be subject to pre-notification meetings and
discussions.
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Closing before clearance

The penalties for early closing are similar to the penalties for failure to notify (see; Failure to
notify). There has been only one precedent in which the CADE imposed a fine of BRL 3 million
(USD 1.5 million) for gun jumping (see Merger Case no. 08700.005775/2013-19).
Closing before clearance is only authorised under very specific circumstances, where the target is
in financial distress, or in cases involving public bids (see; Exceptions to the suspensive effect).
There are no clear rules on carving out Brazilian business or assets for deferred closing in global
transactions.
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Timeline for clearance

The CADE has a maximum of 330 days to complete its review (240 days is the standard, which
can be extended for another 60 days at the parties request, or for another 90 days if the authority
determines a case is complex). The regulations are not clear as to the date in which this deadline
commences, but it is likely to be interpreted to start from the day the authority acknowledges that
the notification submitted was complete and not subject to corrections or amendments.
The current average time of analysis, from the day of filing to the clearance is approximately 30
days, with the review of non-fast-track cases with no antitrust concerns in the merits lasting for
approximately 90 days. These estimates are based on the past practice of the CADE, and
unfortunately there is no legal obligation for the CADE to abide by that practice in the future.
However, the CADE has been signalling to the market that it intends to follow these targets as
closely as possible. If the transaction has antitrust concerns in the merits, it is not possible to
estimate an accurate timeframe for clearance, which will be highly dependent on the fact finding
the CADE decides to conduct (e.g. consulting third parties, producing economic evidence on
efficiencies, negotiating settlement with the parties etc.)
After the CADEs Directorate General issues clearance, the CADEs regulations set out a 15-day
waiting period to allow for appeals from third parties or requests from the CADEs Board of
Commissioners; if there are no appeals and the Commissioners remain silent, closing can occur.

Substance of the Review

The substantive test

The law determines that the CADE reject transactions that imply the elimination of competition
in a substantial part of a relevant market, that may create or reinforce a dominant position, or that
may result in market domination. However, these types of transactions can be approved if: (i)
they create substantial efficiencies; and (ii) their benefits are shared to a relevant extent with
consumers.

Although there is a substantial lack of debate on what this legal substantive test actually means in
practice, the CADE usually adopts what could be called conventional antitrust wisdom for
assessing whether a transaction actually eliminates competition.
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Competition concerns
The CADE does not limit the type of competitive concerns it investigates; decisions in the past
have dealt with a multitude of concerns, from unilateral effects to elimination of potential
competition, including portfolio issues, vertical integration issues and conglomerate effects.
It is very difficult to point out single points of specific competition concerns of the authorities,
but the authorities have shown an interest in the spillover effects associated with joint ventures,
the role of investment funds and, in general, gun jumping issues.
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Economic efficiencies
The competition law expressly lists economic efficiencies as factors that may authorise the
consummation of transactions that limit competition. According to that law, a relevant part of the
benefits resulting from the transaction must be transferred to consumers.
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Non-competition issues
Under Law 12,529, the CADE is not authorised to take other non-competition issues into
consideration in its assessment of the merits of its competition review.
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Joint ventures
The CADE has dedicated a great deal of effort in the past dealing with the spillover and coordination effects of joint ventures.

Decision: Prohibitions and Remedies

The CADE is entitled to approve, condition or reject the transactions that are subject to its
review. It has a wide spectrum of powers to interfere in the transaction, and may resort to Courts
if the circumstances so determine. However, to impose conditions or reject a transaction, the
authority has the burden of showing that the transaction limits competition and that the remedies

(if any) it decides to adopt are the least restrictive, are capable of addressing the competitive
concerns, and allow the transaction to be closed.
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Negotiated remedies
Parties are able to negotiate and the authority has historically been open to negotiating solutions
for merger cases.
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Procedural steps
Under the CADEs regulations, following the SGs challenge to the transaction the parties have a
30-day period to negotiate remedies with the CADE.
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Conditions and timing for remedies

The law and the regulations adopt very open rules regarding the timing for compliance with
remedies, and there are very few precedents to offer precise guidance on this topic. It is generally
assessed on a case-by-case basis, depending upon the remedies and the type of transaction, and
the final wording of the decision issued by the CADE (or settlement executed by the CADE and
the parties).
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The decision
All proceedings are public. Public versions of all documents, including notification forms,
technical opinions and final decisions, are made public at the CADEs web site. Sensitive and
non-public information is treated confidentially, with this information excised from the public
versions of the documents.
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Foreign-to-foreign transactions
The CADE has recently imposed remedies in two foreign-to-foreign transactions:
(a) Merger Case no. 08700.009882/2012-35, involving Munksj AB (Sweden) and Ahlstrom
Corporation (Finland). The remedy called for the divestment of an industrial plant by Ahlstrom
Osnarbrck GmbH in Osnarbrck, Germany. The decision was issued on May 22, 2013.

(b) Merger Case no. 08700.006437/2012-13, involving Syniverse Holdings, Inc. (United States)
and WP Roaming III S.A.R.L. (Luxembourg). The remedy called for the divestment of some
assets belonging to MACH in the European Economic Area. The decision was issued on May 22,
2013.

Ancillary Restraints

The merger review in Brazil includes the analysis of all related arrangements (e.g. non-compete,
exclusivity clauses). According to both the short and long notification forms, parties are
requested to notify any kind of agreements or clauses that restrict in any way the competition
between the parties, and also to provide support for their economic rationale as a restriction that
is ancillary to the reportable transaction.

Third Party Rights, Confidentiality and Cross-Border

Cooperation

Third party rights

Third parties may be involved in the review process in Brazil in two main ways. Firstly, in a
passive form, answering the authoritys information requests about market structure, and any
other data deemed to be relevant. The second is in an active form, opposing the transaction
within 30 days of the notice published in the Official Journal upon the commencement of the
review, or presenting appeals to the CADE against the decision for approval of any transaction,
which may occur up to 15 days before the issue of the CADEs clearance.
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Confidentiality
In Brazil, all government procedures should be considered public. This includes the notification,
the decision, and any other documents related to merger cases. However, information and
documents related to the companies activities that may represent a competitive advantage for
other companies may be subject to confidential treatment.
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Cross-border co-operation
The CADE is considerably engaged in co-operation with other jurisdictions, although it is
unclear how this co-operation works in practice in the context of complex transactions
(exchanging information, etc.).

Appeals and Judicial Review

The CADE is the ultimate administrative body responsible for the analysis of competition-related
matters and antitrust enforcement, and its decisions can only be challenged before the federal
courts. Given the particularities of the Brazilian court system, it is not possible to provide an
estimate of a timeline for appeal, which could last anywhere from three or four years up to a
decade or more.
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