On December 1, 2010, the Federal Senate approved Bill of Law No.
06/09 (initiated in the House of Deputies as Bill of Law No.
3,937/04), which aims to amend Law No. 8,884/94 that regulates the
Protection of the Brazilian Antitrust System.
One of the main changes introduced by such Bill of Law concerns
the raising of the gross turnover threshold triggering submission
of a given transaction to the Brazilian antitrust authorities.
Pursuant to the current criteria, in the event that one of the
groups involved in a transaction subject to merger review
(including mergers and acquisitions and joint ventures) has
registered gross turnover in Brazil of at least R$400 million in
the last financial year, such transaction must be notified to the
Brazilian antitrust authorities.
The Bill of Law aims to increase the threshold for such gross
turnover by determining that corporate groups with gross turnover
in Brazil of R$1 billion, on one side of the transaction, and R$40
million on the other, must have their transaction scrutinised by
the Administrative Economic Defence Council (CADE). This threshold
will also become the only test triggering submission of a
transaction, thereby eliminating the other test currently adopted,
which is a 20% market share in the given relevant market.
In addition, all filings are to become pre-closing instead of
post-closing, as is the case today.
The changes proposed may also affect other transactions, such as
supply and distribution agreements, which have also been subject to
CADE's analysis under merger review rules. Should this Bill of
Law be approved, the number of merger filings, which have currently
been overwhelmingly approved without restrictions, will
Moreover, the Bill of Law aims to reduce the deadline for merger
review by the Competition/Antitrust Authorities. Besides
introducing changes to the economic criteria of merger review
filings, the Bill of Law introduces a reduction in penalties for
anticompetitive behaviour. Such penalty varies from 1% to 30% of
the gross turnover registered by the corporate group under the
current scenario (registered in the financial year prior to which
the infraction occurred). The Bill of Law will change such
threshold to 0.1% to 20% of the gross turnover registered either by
the individual company in the relevant market, or by the group or
conglomerate, calculated in respect of the gross turnover
registered in the financial year prior to the investigation. The
Bill of Law introduces the criteria of 1% to 20% of penalties for
directors who lead anticompetitive behaviour calculated on the
actual penalty imposed on the group committing the infraction.
The Bill of Law will now return to the House of Deputies for
final approval. CADE's commissioners believe the Bill of Law
will be approved by the Brazilian Congress and confirmed by
recently elected President Dilma Rouseff by mid 2011. Once the Bill
of Law has been approved, CADE will have one year to implement the
Before (Law No.
After (Bill of Law No.
Merger review by
Companies holding 20% of market share in the relevant
Gross turnover in Brazil of R$400 million
Any market share in the relevant market;
Corporate groups with gross turnover in Brazil of R$1 billion,
on one side of the transaction, and R$40 million on the other
Pre-closing or post-closing filing
Pre-closing filing only
CADE's review deadline:
30 days – Secretariat for Economic Monitoring of the
Ministry of Finance
30 days – Secretariat of Economic Law of the Ministry
60 days - CADE
CADE's review deadline: 120 days, with a 90 day extension
(at CADE's request) with a further 60 day extension (at the
From 1% to 30% of the gross turnover registered by the
Penalty up to 50% of 30% of gross turnover applied to the
From 0.1% to 20% of the gross turnover registered either by the
individual company in the relevant market, or by the group or
conglomerate, calculated in respect of the gross turnover
registered in the financial year prior to the investigation;
From 1% to 20% of the actual penalty imposed to the
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