Latin Lawyer Reference: Merger Control 2016 - Brazil

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Applicable legislation and the competent authorities

1. What is the legislation applicable to merger control and how long has merger control legislation been in force?

   The first merger control legislation in Brazil was enacted by Law No. 8,158/91, which created the then National Secretariat of Economic Law. This Law was later replaced by Law No. 8,884/94, which coincided with the country's transition to a market-based economy. Then, in May 2012, Law No. 12,529/2011 (the Antitrust Law) took effect and introduced key changes to the previous system, including a new institutional framework, a mandatory pre-merger notification system and new filing thresholds. The Administrative Council for Economic Defence (CADE) may issue resolutions to regulate specific aspects of the merger control system; key merger control resolutions are:

   Resolution No. 02/2012, which provides (i) the short and standard filing forms; (ii) the definition of economic group for purposes of the calculation of the relevant turnover for determining the need for a filing; (iii) transactions eligible for the fast-track proceeding; and (iv) rules governing notifications regarding bonds, debentures and other securities convertible into shares; Resolution No. 10/2014, which establishes rules for determining the need for a filing in case of associative contracts; and Resolution No. 13/2015, which establishes rules for gun-jumping investigations and for the determination of the filing of transactions that do not meet the statutory thresholds. Finally, under CADE's internal regulations, CADE shall issue a binding statement after ruling in the same direction at least 10 times. To date, CADE has issued nine binding statements, all but one related to merger review (the great majority still under the previous competition law). CADE has not yet issued horizontal merger guidelines under the current regime and it generally resorts to the guidelines issued by the former Secretariat of Economic Law (SDE) and the Secretariat for Economic Monitoring (SEAE) in 2001. No major changes to the legislation are currently being discussed.

2. Is there any additional sector- or industry-specific merger regulation legislation?

   Additional sector legislation applies to regulated industries such as energy, oil and gas, banking and telecoms, which are enforced separately by regulatory agencies. These sector-specific rules may establish that certain mergers (eg, transfers of control) are subject to review by the regulatory agency as well (eg, Law No. 9,472/1997 sets forth the rules that apply to the telecoms sector). There has been a long-running controversy between Brazil's Central Bank and CADE to determine which agency has jurisdiction to enforce competition rules in the financial sector. Transactions that fulfil the thresholds provided by each agency must be filed with each of those agencies for antitrust review. This controversy will only be solved through the issuance of new legislation.

3. Are parties that are required to file notification of a transaction pre-closing obliged not to close their transaction pending regulatory review?

   Under the Antitrust Law pre-closing notification and approval is required. The Reporting Commissioner may allow parties in complex cases to close the transaction before CADE's clearance. Such closing, however, is subject to conditions related to limitations on asset settlement, closing of stores or productive units, integration of activities, dismissal of employees, termination of brand or product lines and alteration of marketing plans. We are not aware of any case where CADE has resorted to this provision to date. Please note that transactions carried out in the over-the-counter or in the stock exchange markets do not require CADE's clearance to be completed...