The new Brazilian Competition Act - Law 12.529/2011 - comes into
effect on 29 May 2012. It brings significant changes to merger
control and to the rules on investigations of anticompetitive
behaviour, as well as restructuring the Brazilian competition
authority (Conselho Administrativo de Defesa Economica
Key aspects include:
The big change is that transactions caught by the new merger
control rules must be pre-notified and may not close until
clearance is obtained from the CADE;
Transactions covered by the merger control procedure include
acquisitions of controlling interests, mergers and joint
Threshold requirements: the group turnover generated in Brazil
by at least one party must exceed BRL 400 million (approx.
£140 million) and the group turnover
generated in Brazil by at least one other party must exceed BRL 30
million (approx. £10 million);
Fines may apply for failure to notify (up to BRL 60 million,
approximately £22 million) and for gun-jumping (putting the
merger into effect before clearance);
CADE will have up to 240 days to render a final decision,
although this period may be extended by 60 days if requested by the
parties or 90 days if requested by the competition agency
(non-cumulative). An important point is that there is no automatic
clearance on expiry of the period – if CADE does not
reach a decision within even the extended period, closing of the
transaction will remain suspended. This will produce both
commercial and legal uncertainty. Parties will be allowed to
negotiate an acceleration of the analysis with CADE. Transactions
that do not raise competition concerns may be approved under a
Further detail on implementing rules is expected from CADE in
the coming months.
Undertakings found to breach the prohibitions on cartel
activity and unilateral exclusionary practices (abuse of dominance)
may be subject to fines. The new levels of fines will be based on
the turnover generated on the relevant market under investigation
and will range from 0.1% to 20% of the companies' income from
that line of business. In addition, corporate officers may also be
subject to fines ranging from 1% to 20% of the fine imposed on
their relevant businesses. There will doubtless be much discussion
of the definition of the relevant market in each case.
The new CADE
CADE will have a Tribunal formed by one President and 6
commissioners, an Economic Studies Department and a General
Officer. The Ministries of Finance and Justice will no longer be
required to issue mandatory reports on matters falling within
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After a little over two years since the enactment of Law No. 12,529/11 the practical experience of the Administrative Council for Economic Defence is leading towards clarifications of those aspects of Brazil’s new merger notification system that require adjustment.
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