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International Law

New Rules on Merger Notifications in Brazil

by Leonardo Rocha e Silva and Jose Alexandre Buaiz Neto


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.