Bad Documents Under An Antitrust Perspective In Brazil – Consequences And How To Avoid Their Creation

The competition law (Law 12529/2011), in effect since May 29, 2012, brought about profound changes in the Brazilian competition system, particularly in merger control cases. These changes comprise the structural reform in Brazil's competition authority (the Administrative Council for Economic Defense, CADE, also currently known as the "New CADE"), new criteria for the notification of merger cases1, and the legal requirement for CADE's prior approval as a condition precedent for consummation of deals.

Business persons, lawyers and the New CADE authorities have been faced with challenges to keep up with those changes. Merger filings to New CADE now call for delivery of a wide range and robust volume of documents and information when compared to those under the previous system.

The volume of information and documents provided by the parties will depend on the complexity of deals from an antitrust perspective. In this respect, depending on the procedure to be adopted, there are two types of "notification forms". When it comes to the fast-track review procedure form (i.e. the form for non-complex deals that are likely to have minor potential to harm competition2, as set forth in the New CADE rules), in addition to submitting the relevant contracts, as already required under the former system, the parties must provide a "list of all other documents produced in connection with the deal".

The form to be completed if the deal falls within the ordinary review procedure, i.e. a complex deal likely to cause a more significant impact on the market3, goes much further and requires delivery of the following documents:

i. Copies of all documents prepared to evaluate or assess the proposed deal (in terms of market competition patterns, market share, competitors, projected sales growth rates, projected expansion to new geographic markets, and other significant competition matters);

ii. List of all other documents prepared in connection with the deal, such as input supply agreements, draft minutes of meetings concerning the deal, public offering documents sent over to the Brazilian Securities Commission (CVM), and other documents; and

iii. With respect to the activities carried out by the parties, they must submit all documents on the competitive positioning of the company and of its competitors; supply and demand conditions; dispute for clients; strategic behavior (price, sale, launching, innovation, entries/exits etc.); reporting on anticompetitive behavior...