After Law # 12,529/2011 and CADE Rule # 02/2012 came into force on May 30, 2012, several queries appeared about what should be submitted to the Brazilian Antitrust Authorities (CADE) for the purpose of the merger control. While there was a great number of precedents under the old Merger Control Regime, the same cannot be said about the new one. For this reason, private attorneys have an important role in raising relevant matters for the competition policy in Brazil.
One of the precedents regards the definition of control. CADE’s General Directorate and CADE’s Attorney Office banned the use of relevant influence to define control, because CADE Rule # 2/2012 set out objective criteria: what should be considered is the corporate stake to be acquired. If the objective criteria are not met, the transaction is not referable, even though the turnover threshold is met and some relevant influence arises.
The second precedent confirms that there is no de minimis criteria for the turnover of the target business. CADE’s General Directorate and CADE’s Attorney Office considered that the turnover of the target business does not matter, as long as the yearly turnover of the economic groups involved in the transaction meets the objective criteria of R$ 75 million and R$ 750 million.
The third precedent involves the definition of economic group for state-owned enterprises. For the purpose of calculating the turnover of the economic groups in order to determine whether the transaction is referable or not, one should take into account only the specific economic group involved in the transaction. In other words, other economic groups belonging to the same country should not be added to the turnover.
The fourth precedent provides some guidance on which kind of associate agreement should be notified. Even though there remains doubts in the matter, CADE’s General Directorate began to face the matter.
Note that CADE’s Administrative Tribunal did not rule in these precedents, so that these decisions may evolve later. More legal safety can only be attained if other precedents endorse these conclusions or if precise administrative rules are issued.