Brazil: Gun Jumping: Lessons Learnt From CADE

Last Updated: 4 October 2016
Article by Ana Paula Martinez and Mariana Tavares De Araujo
Most Read Contributor in Brazil, July 2017

Brazil's competition law (Law No. 12,529, of 30 November 2011), which entered into force on 29 May 2012, introduced a mandatory pre-merger notification system, aligning the Brazilian rules with international best practices. Under the current regime, transactions that meet the mandatory filling thresholds cannot be completed prior to receiving clearance from the competition authority (the Administrative Council for Economic Defense – CADE).

Penalties for "gun jumping" include fines ranging from BRL 60,000 (roughly USD 18,000) to BRL 60 million (roughly USD 18 million) and the transaction may be also declared null and void by the authority.

CADE's Internal Rules state that "[t]he parties should maintain their physical structures and competitive conditions unaltered until CADE's final approval, any transfer of shares or any influence of one party over the other's business being prohibited, as well as the exchange of competitively sensitive information outside of what is strictly necessary for the execution of the relevant binding agreement by the parties." Furthermore, Resolution No. 13/2015 sets forth the procedural aspects governing gun jumping investigations, establishing that the review on the merits shall be suspended while the gun jumping incident is pending. Finally, on May 2015, the agency launched non binding guidelines outlining its interpretation on (i) the definition of gun jumping and the activities that can lead to it; (ii) specific procedures to avoid the practice; and (iii) the applicable sanctions.

Since the first gun jumping case adjudicated by CADE in August 2013, the authority has reviewed other twelve cases, finding violations in nine of them. Fines imposed ranged from BRL 60,000 (roughly USD 18,000) to BRL 30 million (roughly USD 9 million), and the cases involved sectors as diverse as car manufacturing, oil and gas exploration and canned vegetables. The main aspects of those decisions are set out below.

Settlements. Seven out of the nine cases where a violation was found were resolved through settlement – the so-called Settlement on Merger Control, ACC in its Portuguese acronym – with proceeds directed to the Diffuse Rights Defense Fund. In such cases, CADE's Tribunal has also imposed to the parties obligations other than those set forth by the law. For example, in the Goiás Verde/Brasfrigo case, adjudicated on 22 April 2015, it was decided that the buyer could not use a certain brand (Jurema) neither create new ones for the canned corn, canned peas and mixed vegetables markets during a two-year period, which equaled the amount of time the parties failed to communicate the transaction to the antitrust authority. Those conditions were required even though the transaction did not raise any antitrust concern. According to CADE, their aim was primarily to deter gun jumping practices.

CADE's clearance as a contractual condition precedent. In some cases (OGX/Petrobras, UTC/Aurizônia and UTC/Potióleo), the absence of CADE's clearance as a condition precedent to the transaction led CADE to assume the existence of gun jumping.

Fine/monetary contribution calculation. CADE's guidelines note that the agency should consider the following factors when calculating the amount due: (i) the transaction context (mostly whether it was voluntarily submitted or not and whether it had already been consummated or not at the time of the submission), (ii) the nature of CADE's decision (veto, conditional clearance or unconditional clearance), (iii) the amount of time since the transaction has been consummated; and (iv) the economic status of the parties. The guidelines do not indicate what weight should be given to each of these factors, and in practice the Tribunal has considered the value of the transaction as a basis for calculation of the fine in merger and acquisitions cases. In the Blue Cycle/Shimano case, which referred to a joint venture formation, reviewed on 17 August 2016, the agency indicated that the share capital and the joint venture revenues could serve as a basis for calculating the amount due. Finally, during the same session, CADE's Tribunal reviewed the JBS/Tramonto case, involving the failure to submit a leasing contract, and applied a non disclosed percentage to the value of the transaction plus an additional 1% increase for each year the parties failed to notify the transaction. CADE has collected over BRL 35 million (roughly USD 11 million) in gun jumping cases to date.

Declaration of the transaction as null and void. In gun jumping cases, the transaction may be also declared null and void by the authority. Such sanction has often been rejected by CADE due to its high social costs, mainly related to the difficulties associated to the dissolution of complex deals and the interests of third parties acting in good faith. Another aspect taken into consideration is the parties' financial situation (eg, in OGX/Petrobras and JBS/Tramonto, some of the parties were at a pre-bankruptcy stage). In the Gaslocal/Gasmig case, CADE made reference to the essentiality of natural gas supply public services to justify the non-imposition of the sanction. Finally, in the Blue Cycle/Shimano case, although the transaction itself was not declared null and void, the Tribunal decided to direct such sanction to a key supply agreement associated to the transaction until the review on the merits of the transaction was concluded.

Conflicting positions within CADE. Given the novelty of the subject and the absence of settled case law, it is not uncommon for the Directorate-General (DG) and CADE's Tribunal – and even CADE's Commissioners amongst themselves - to have conflicting positions. For example, during the session held on 17 August 2016, the Tribunal found that a down payment of 20% of the value of the contract would not amount to gun jumping, contrary to the DG's view on the issue (Hypermarcas/Reckit Benckiser). During that same session, the majority of the Tribunal's members disagreed to the BRL 5 million (roughly USD 1,5 million) fine proposed by the Reporting Commissioner, reducing the amount to BRL 1,5 million (roughly USD 500,000), due to proportionality concerns (Blue Cycle/Shimano).

Carve-outs and other arrangements not previously agreed with CADE will not be accepted. The need to urgently close a transaction was a justification presented in two gun jumping cases before CADE (Fiat/Chrysler and Cisco/Technicolor). The Brazilian authority rejected the argument, indicating that, in such cases, the parties are rather expected to formally request a derogation under CADE's Internal Rules. Furthermore, in the Cisco/Technicolor case, the agency indicated that carve out agreements in global transactions aiming to exclude from closing the jurisdictions where the antitrust review is pending would still amount to gun jumping and would not be taken as a mitigating factor when sanctions are to be imposed. In this case, CADE imposed the record fine of BRL 30 million (roughly USD 9 million) to indicate the seriousness of the violation.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.