Today the Brazilian Official Gazette published the Regulation # 10/2014 of the Administrative Council for Economic Defense (Cade), Brazil's antitrust authority, which sets forth the concept of "associative agreements" and establishes the hypothesis by which these agreements must be previously submitted for antitrust clearance.
According to article 2 of the Regulation # 10/2014, "associative agreements" are those (i) which result in an interdependent relationship (horizontal or vertical cooperation, or sharing of risks) between the parties or between any of the companies of the respective economic groups, and (ii) whose term reaches or exceeds two years (respective extensions included). According to the first paragraph of the said article, "cooperation or sharing of risks that result in an interdependent relationship" occurs when:
(i) In case of horizontal overlap related to the object of the agreement, the combined market shares of the parties, or any company of their respective economic groups, in the market affected by the agreement is equal to or greater than twenty percent (20%),
(ii) In case of vertical integration related to the object of the agreement, whenever at least one of the parties, or any company of their respective economic group, holds market share equal to or greater than thirty percent (30%) of the markets affected by the agreement, provided at least one of the following conditions is fulfilled:
a) The agreement establishes the sharing of revenues and losses between the parties; or
b) The agreement results in an exclusive relationship.
Should the above-mentioned conditions and the turnover thresholds established by the competition legislation be met, associative agreements, such as distribution agreements or licensing of intellectual property rights agreements, must be submitted for antitrust clearance.
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