CADE and BACEN formed a Working Group to study and discuss
antitrust matters related to the National Financial System,
focusing in form, limits of competence and cooperation among them.
The Working Group is formed by 4 representatives of each authority
and will have 120 days to conclude their activities, with the
possibility of extending this period, if necessary.
The opportunity of forming this working group arises out of the discussions relating M&A transactions that must be submitted to CADE, according to Law n. 12.529/11 (Brazilian Antitrust Law), which involves financial institutions, where one more step may be taken before the BACEN, which is responsible for supervising the national financial system and to protect harming situations for national economy, pursuant Law n. 4.595/64.
There is a competence conflict between these two rules, where in one side, Law n. 4.595/64 provides the private competence to BACEN to approve corporate transactions involving financial institutions and to regulate competition conditions between financial institutions and, on the other side, law 12.529/11 sets forth that CADE is the competent authority to authorize corporate transactions which may impact competition, according to the thresholds and conditions provided by law.
This conflict is currently under judicial discussion. In 2001, Banco Bradesco acquired Banco BCN and did not submitted the transaction to CADE, claiming that the Brazilian Central Bank was the competent authority to approve the transaction. CADE fined Banco Bradesco, which took the case to the Judiciary. Brazilian Superior Court of Justice (STJ) decided that the BACEN has exclusive jurisdiction for approving transactions between financial institutions. Therefrom, CADE appealed to Brazilian Supreme Court (STF) and until now there is no decision awarded.
Furthermore, this matter is also being discussed in Brazilian Congress through Bill of Law n. 350/2015. In summary, the Bill provides a mutual cooperation between both authorities, in which a corporate transaction involving financial institution should be firstly submitted to BACEN. If denied, then CADE should abstain to verify the transaction. However, if approved, should be then submitted to CADE, which may approve it or not.
The active discussion of this matter represents a major step in improving Brazilian Competition System, where BACEN will keep its important hole of protecting the national economy and CADE will continue to be the defense of competition watchdog.
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