Brazil's Administrative Council of Economic Defense – CADE approved on October 29, 2014 Resolution No. 10 ("CADE Resolution No. 10") defining the criteria for notification of associative agreements.
Article 90, IV of Law No. 12.529/11 (the "Brazilian Antitrust Law") sets forth that "associative agreements" are subject to the pre-merger control system if the parties meet the turnover thresholds.
CADE case law held that a broad range of transactions can be considered as so called "associative agreements", such as supply and distribution agreements, IP licensing agreements, joint undertakings, among others. Such agreements have in common that they are "cooperative" in nature or have restrictive covenants (e.g. exclusivity and non-compete provisions).
According to CADE Resolution No. 10, associative agreements are now defined as any agreement which (i) exceeds a term of 2 years and (ii) allows horizontal or vertical cooperation or results in the sharing of risks by creating a relationship in which the parties depend on each other.
More specifically, the new resolution defines that there will be horizontal or vertical cooperation or sharing of risks in agreements which:
- give rise to horizontal overlaps between the contracting parties or their respective groups, and if their combined market share in a relevant market affected by that specific agreement is equal to or in excess of 20%; or
- gives rise to vertical links between the contracting parties or their respective groups, and if at least one of them has at least a 30% market share in a vertically related relevant market affected by that specific agreement, provided that the agreement contains:
- o provisions regarding the sharing of profits or losses between the parties; or
- exclusivity undertakings.
A Moreover, agreements with a term of less than two years must also be notified whenever they meet the criteria above and reach or exceed the 2-year term upon renewal.
CADE Resolution No. 10 will enter into effect within 60 days from its publication in the Official Gazette, which occurred on 04 November 2014.
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.