Brazil’s “New” Antitrust Law and the Super CADE
The Brazilian Antitrust Law was amended in December 2011, introducing numerous changes to the current competition/antitrust system. Some of the key changes to the antitrust law include a restructuring of the antitrust authorities, new merger rules and a revised definition of anti-competitive behaviors.
Antitrust Law Authorities
Under the old system, business combinations were analyzed by three separate governmental agencies: first, the Ministry of Finance; second, the Ministry of Justice; and third, the Administrative Economic Defence Council (Conselho Administrativo de Defesa Econômica – CADE). The revised antitrust law merges these three agencies, creating a single regulatory body known as “Super CADE”.
Some of the new merger controls that developed as a result of the revised antitrust law include:
- Merger review submissions must now be filed with the antitrust authorities prior to a transaction’s closing. The prior law allowed transactions to be submitted for review post-closing.
- The market share test of 20% has been eliminated. This test was used to verify individual and combined market share resulting from a merger.
- The turnover test has been revised. Now, transactions must be approved if one party has recorded gross revenues in Brazil in excess of R$400 million during the previous fiscal year and the other party has recorded a minimum of R$30 million.
- All mergers and acquisitions meeting the new turnover threshold must file with the Super CADE within 15 days of the first binding document.
- Super CADE now has 240 days to review a transaction after receiving the submission. This new deadline, however, is subject to a 90 day extension.
This revised antitrust law includes a reduction in penalties for anticompetitive behavior. Currently, penalties range from 1-30% of a company’s gross revenues (for the fiscal year prior to the infraction). The revised law reduces this penalty range to 0.1% to 20%. In the event that the governing body is unable to accurately determine or estimate the turnover for the company, the penalty will range from R$50,000.00 to R$2,000,000,000.00.