by Leonardo Rocha e Silva and Jose Alexandre Buaiz Neto
Excerpt:
On 29 May 2012, the new
Brazilian Competition Act (Law No. 12529, enacted on 30 November 2011) (Act)
became effective, replacing the former law enacted in 1994. The new Act will
change the Brazilian competition system significantly and will have a direct
impact on the merger control notifications. In general terms, doing business in
Brazil will be affected as the Act now imposes mandatory waiting periods for
the implementation of transactions. "Gun jumping" issues will also be
taken into account to consider potential fines and negative consequences. Even
though the new Act also makes some changes to antitrust investigations in
Brazil, this article will focus only on merger control issues.
Brazil before the New Act
Until now, Brazil was known as a jurisdiction in which many transactions had to
be notified, even if they had no substantial impact on any Brazilian markets.
This was due to the relatively broad notification thresholds and the absence of
de minimis provisions in the former law, which would allow transactions
with minor impact in Brazil not to be notified. Also, because one of the
thresholds provided for in the former law related to market shares, there was
uncertainty about determining if a transaction had to be notified in Brazil.
In addition, Brazil was also known for lengthy review periods and for the
non-existence of mandatory waiting periods. In other words, except in cases in
which the authorities specifically ruled that a closing could not take place,
there were no limitations on the consummation of a transaction prior to
obtaining clearance. Even though this could be interpreted as creating
uncertainty for complex deals (considering that the authorities could
theoretically determine the unwinding of a transaction), the absence of waiting
periods was very important for simple transactions, which represent the
majority of the filings.
Prior to the enactment of the
new Act, merger review in Brazil was carried out by three separate authorities:
(1) the Economic Monitoring Office of the Ministry of Finance (SEAE); (ii) the
Economic Law Office of the Ministry of Justice (SDE); and (iii) the
Administrative Council for Economic Defense (CADE).
As from 29 May 2012, all activities previously carried out by the three
entities have been consolidated at CADE, which is responsible for merger
reviews and for investigations under the new Act. CADE has three main bodies in
its new organization: (i) an Administrative Board; (ii) a General
Superintendent; and (iii) an Economic Studies Department. Most merger control
cases shall be reviewed only by the General Superintendent. Only significant
cases shall be subject to the analysis of the Board of the new CADE.
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Leonardo Rocha e Silva and Jose Alexandre Buaiz Neto are partners in the antitrust practice group of Pinheiro Neto Advogados in Brasilia.
Leonardo Rocha e Silva's
practice involves merger filings, anti-competitive practices
investigations, and compliance programs. Mr. Rocha e Silva writes and
speaks in his field, and he is currently the vice-president of the
Competition Defense Committee of the Brazilian Bar Association, Section
of the Federal District.
Jose Alexandre Buaiz Neto
has extensive experience in antitrust law counseling and litigation,
including cartel investigations, immunity applications, merger filings,
abuse of dominance investigations, and compliance. He writes and speaks
in his field. Mr. Buaiz Neto is the president of the legal committee of
the American Chamber of Commerce in Brasilia, and a member of the
Competition Defense Committee of the Brazilian Bar Association, Section
of the Federal District.