The President of the Administrative Council for Economic Defense ("CADE") released for public consultation the draft of the resolution that will discipline the query procedure provided in §§ 4 and 5 of art. 9 of Law nº 12,529/2011 ("Brazilian Competition Law"), which states that CADE's Tribunal is authorized to answer queries about ongoing practices upon payment of fee and the submission of relevant documents.

According to the text of the public consultation, any interested party may submit queries to the CADE's Tribunal, requesting its position on the application of the competition legislation in relation to: (i) the interpretation of the legislation or regulation of CADE concerning merger control, in respect of certain transactions; (ii) the validity of ongoing acts, contracts, business strategies or conduct of any kind, by the consultant; (iii) or the validity of acts, contracts, business strategies or conduct of any kind, ever conceived and planned, but not yet started by the consultant.

In order to proceed with the request for queries before CADE's Tribunal, the consultant shall provide several mandatory information of the transaction, including (i) the parties involved; (ii) the complete and exhaustive description of the facts relevant to the query and the documentation that supports the facts and its analysis; (iii) any CADE's precedent judgment related to the subject of the query, and (iv) a statement that the facts of the query are not subject of any investigation or administrative proceedings pending or already judged by CADE, in case of queries related to the validity of ongoing practices.

In this sense, if CADE's Tribunal understands that there is evidence of unlawfulness aspects in an ongoing conduct, it shall determine, within the same decision, the conversion of the query procedure into an administrative proceeding in order to prevent, investigate and suppress violations of the economic order, according to their corresponding requirements.

It is important to point out that the query submitted to CADE shall take into consideration truthful acts/ facts, since a query involving purely hypothetical facts or that requires other information not provided by the consultant will be rejected by CADE. Moreover, the query's subject shall not be in course of investigation by CADE, in order to not have its analysis rejected by CADE.

The query request will be directed to the CADE's President and forwarded afterwards to one of the other members of CADE's Tribunal, which will become the Reporting Commissioner of the procedure at the first subsequent session of distribution, and shall be put on trial within 150 days.

The answer to the query shall be related specifically to the facts provided in the consultation, and will be binding to CADE's Tribunal and to the consulting parties for a period of up to 5 years.

However, the binding aspect of CADE's answer will not harm its prerogative to reconsider the interpretation on the factual and/or legal issues involved, or even, if the public interest so requires, determining the termination of the examined practice due to the existence of new facts or reasons.

Furthermore, whenever the query is directly or indirectly related to the existence of previous CADE's precedents divergent as per its object, the Tribunal may, at its own discretion, grant additional effects of jurisprudence Digest, which shall be approved by an absolute majority of the members of the Plenary of CADE's Tribunal without the formalities provided in its internal regulations1.

It is important to point out that the regulation of the query procedure before CADE is deemed as positive, whereas companies interested in promoting certain business strategies (or even in ongoing practices), but that still have doubts with regard to their competitive impacts and/or in connection with CADE's interpretation for a particular act, can query the antitrust agency regarding the feasibility and legality of such operation. This avoids problems and the risk that CADE considers such practice unlawful, incurring in eventual penalties, due to the binding aspect of the outcome of the consultation carried out during the legal period.

The public consultation period ended in November 28, 2014, but CADE has not yet set a deadline for the publication of the final text of the resolution arising out of this public consultation.


¹ (i) decisions taken by vote of the absolute majority of the members of the Plenary of CADE's Tribunal in at least 10 consistent precedents; and (ii) final decisions from the General Superintendence not modified by CADE's Tribunal in 10 consistent precedents at minimum.

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