Keywords: Brazil, merger control, FIESP, antitrust,

After a little over two years since the enactment of Law No. 12,529/11 (the Brazilian Antitrust Law), which replaced the previous merger notification system, the practical experience of the Administrative Council for Economic Defence (CADE) is leading towards clarifications of those aspects of Brazil's new merger notification system that require adjustment to allow for a more transparent, consistent and efficient manner to address antitrust assessments. On September 25, 2014, the Federation of Industries of the State of São Paulo (FIESP), one of the most relevant forums for the discussion of important economic and industrial issues in Brazil, hosted a seminar, which was attended by renowned academics, lawyers and industry representatives, to discuss the most relevant aspects of Brazil's current antitrust policies.

Institutional Agenda

One of the panelists was CADE's President, Vinícius Marques de Carvalho, who stated that minor, but significant changes were on their way, beginning with the three public consultations published in early 2014 and including a few other consultations planned to be announced in 2015.

Officials have been speaking generally about such changes in recent seminars and events throughout Brazil, and formal announcements are expected by CADE in one of its upcoming plenary sessions.

The changes aim at addressing material and procedural aspects of the merger clearance system, as well as behavior- and compliance-related aspects that may not have been addressed sufficiently by the Brazilian Antitrust Law or its regulations, and could, therefore, be further detailed to bring more certainty and increase CADE's level of predictability in tackling such issues.

About Merger Control

New regulations. Concerning the impact that such measures may have on merger control, President Carvalho has announced that the regulation drafts that shall be submitted for public consultation will provide clearer grounds concerning the procedures to be observed in pre-notification consultancies and general consultancies. The drafts also will establish a proper procedure for assessing supposed gun-jumping infractions and post-merger notifications (until one year after transactions were executed).

Guidelines that define what is not considered gun jumping are also in the CADE's agenda. And, while CADE does not intend to define what gun jumping is, as the concept is intended to be left open to interpretation, there will be efforts to more clearly signal the limits within which parties to a concentration may coordinate prior to merger approval. Carvalho highlighted the important role of clear terms in pre-merger activities and that CADE may authorize what CADE has called a "parlour room" (similar to a data room in the US) where financial aspects of common interests may be discussed, excluding market behavioral strategies.

Clear Formal Statements. CADE's initiative seems aimed at providing clear, formal statements so as to avoid creative interpretations by some lawyers, as has happened with some recent threshold guidance. Such interpretations by lawyers have, for example, sought to create a third criterion in the effects test in the Brazilian Antitrust Law and its regulations. This third criterion would require a transaction to have effects in Brazil, even when objective thresholds were met, in order to the attract CADE's jurisdiction to assess the transaction. According to Carvalho, this effects test does not exist in either the Brazilian Antitrust Law or related regulations.

Similarly, some lawyers have misinterpreted guidance regarding private equity funds. This has been a recurrent question, and Carvalho stated that the thresholds provided by the Brazilian Antitrust Law—turnover and volume of business - shall be construed in a way to comprise only the productive business (or operational business) in Brazil, whether local or through exports to Brazil. Investments shall not be regarded as "volume of business" for the purposes of the merger control threshold provisions.

Amendments to Merger Filings. Carvalho also commented on the amendments to merger filings, saying that amendments may be required not only when the parties do not duly provide what is requested in the notification forms. Amendments also may be required regardless of the parties' information provisions, whenever CADE deems such information relevant to conduct a deeper assessment of the markets involved in a given transaction, even if the parties already have provided information required by the merger notification form.

Additional Information Discussed at the Seminar

In addition to the above mentioned topics, officials from CADE also discussed that some subjects will be tackled later. These subjects include guidelines for remedies, compliance and horizontal overlaps.

In the plenary session that took place in October 1, 2014, CADE revealed the results of the public consultations from early 2014 and published what has been enacted in the new regulations. The subjects therein include: stock exchange transactions and when they should or should not be notified; the associative agreements regulation that might be ruled on later, but still in 2014; the definition of economic groups for investment funds applicable for the purpose of calculation turnover figures; the notification of transactions involving the acquisition of convertible bonds; and a few minor changes in the notification forms.

Behavioral Aspects

The efforts to increase CADE's transparency also will impact the regulations involving behavior infringements. One measure mentioned was the proposal to develop a clearer and more secure procedure for negotiating leniency agreements.


Such recently announced measures are welcome by the sector, and should serve to better define some key elements of antitrust assessments in Brazil.

Originally published 2 March 2015

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