New Merger Review Process in Brazil

Since 1994, when the current Brazilian antitrust law (Law no. 8,884/1994) was enacted, the merger review process has been subject to criticism, mainly focused on the post-closing emphasis of the review process. According to the 1994 law, any transaction that meets one of the legal criteria1 must be submitted for review by the antitrust authorities.2 Such notification must be made within 15 business days from the execution of the first binding transaction document. Thus, the parties can execute the transaction agreements and implement all provisions set forth (i.e., close the transaction) without waiting for the antitrust clearance. The absence of conditions precedent and a waiting period—common in a pre-closing regime—have restricted the effectiveness of CADE's decisions, since the authority has refrained from taking severe decisions (e.g., disapproval and/or divestiture) years after the completion of a merger between competitors. Thus, the purpose of the authority (to restore and protect competition) is hardly achieved in the current legal framework. Other sensitive issues related to the current legal framework have been pointed out by scholars and antitrust practitioners. For example, the 2010 report3 issued by the Organization for Economic Co-operation and Development (OCDE) and the Inter-American Development Bank (IDB) presented several recommendations that could be adopted through the issuance of a new antitrust law modifying the merger review process. The OECD/IDB report addressed two main topics for adjustments. The first suggestion made by the report was to consolidate the investigative, prosecutorial and adjudicative functions of the SBDC into one autonomous agency. The second suggestion was to modify the merger notification and review process to (i) establish a pre-merger notification system, (ii) eliminate the market share notification threshold and adopt criteria based on the domestic turnover of both the larger and the smaller parties in a transaction and (iii) eliminate the notification of non-merger transactions. Seeking to improve the Brazilian antitrust system, the new Brazilian antitrust Law no. 12,529/2011 (New Antitrust Law) was enacted after several years of discussion in the Congress. The law revokes the previous framework of Law 8,884/1994 and sets forth significant changes.4 As expected, one of the major modifications is the adoption of a pre-merger review system with the centralization of the activities by CADE.5 Notification Scope and Thresholds One sensitive aspect of the prior law was the scope of...