Brazilian Antitrust Authority (CADE) Approves Changes In Merger Control Regulations

Brazil's Administrative Council of Economic Defense -CADE approved on 1 October 2014 changes in its internal regulations. The aim was to provide better guidance on Brazil's merger control review. The outcome is the result of three Public Consultations issued last February. The changes came into effect on 7 October.

The main changes were made in Resolution No. 2/2012, which regulates the acquisition of corporate participations and defines transactions eligible to the fast-track procedure, as per the following:

1. New criteria for the definition of "economic group" when investment funds are concerned

   According to the previous wording of Resolution No. 2/2012, there was a single concept for economic group to be used for purposes of calculating turnover thresholds and for submitting information in the CADE filing form. As per the new wording of Resolution No. 2/2012, from now on there will be two different concepts: (i) one concept of economic group for purposes of calculating turnover thresholds and (ii) another concept for purposes of submitting information in the antitrust filing form.

   1.1 Turnover Calculation. The following entities will be treated as being part of the same economic group for purposes of the turnover calculation when an investment fund is the acquiring/selling entity:

   The turnover of all companies of the economic group of each investor/shareholder which holds directly or indirectly at least 50% of the quotas of such investment fund (which takes part in the transaction) via individual participation or by means of any type of shareholders' agreement; plus the turnover generated by companies controlled by such an investment fund (which takes part in the transaction) if such investment fund holds directly or indirectly a participation of at least 20% of the corporate or voting capital. 1.2 CADE Form. For purposes of submitting information in the CADE filing form that allows the antitrust assessment of merger filings (merit analysis), the following entities will be treated as being part of one single economic group:

   investment funds involved in the transaction; investment funds under the same management as the funds involved in the transaction; the fund's manager; economic groups of the investors holding, directly or indirectly, over 20% of the quotas of funds involved in the transaction; companies controlled by the funds involved in the transaction and the companies in which such funds hold, directly or indirectly, participation...