CADE Issues New Merger Control Regulations

The Administrative Council for Economic Defense ("CADE") issued yesterday, May 29, 2012, the applicable regulations for the new Brazilian pre-merger control regime.

Under the new Brazilian antitrust law (Law No 12,529/2011), filing with CADE shall be required if: (i) at least one of the groups involved (seller or buyer) registered gross revenues in Brazil in excess of R$400 million (approx. USD200 million) in the previous fiscal year; and (ii) at least one of the other groups involved registered gross revenues in Brazil in excess of R$30 million (approx. USD15 million) in the previous fiscal year.1

It is expected that said revenues thresholds will be increased by means of a joint rule that may be issued by the Ministry of Justice and the Ministry of Finance shortly. If this is confirmed, the new revenues thresholds will be R$750 million (approx. USD375 million) and R$75 million (approx. USD37 million).2

The main rules under the new Brazilian merger control regulations are the following:

Transition rule: there is a specific provision in the regulations setting forth that notifications filed during the period in which the previous Brazilian antitrust law (Law No. 8,884/94) was in force shall be subject to the previous regime; under said provision, this rule applies to notifications filed with CADE by June 19, 2012. During public hearing yesterday, CADE's Chairman interpreted said provision as follows: (a) transactions formalized by means of a binding document executed on or before May 28, 2012 are subject to Law No. 8,884/94, regardless of the date of their notification to CADE, the parties having the right to close such transactions before CADE's approval; (b) in the event of a mere non-binding document executed prior to May 29, the transaction shall be subject to the new law, even if the relevant notification is filed with CADE before June 19. Formal filing: it is "preferred" that the transaction be filed with CADE only after a binding document is signed. However, there is no provision under the new regulations prohibiting CADE to accept filing on the basis of preliminary documents Review period: CADE shall have up to 240 days to issue its final decision on the notified transaction. This review period may be extended for an additional period of 60 days, if requested by the parties, or for an additional period of 90 days, by means of a justified order issued by the Tribunal. The regulations do not set forth intermediary review periods for...