Brazilian competition law was amended on 5 October 2011. The new law will enter into force in 180 days.
The following are some of the key changes related to merger control.
Mandatory pre-closing filing. With this reform, Brazilian competition law will now follow the International Competition Network Best Practices on merger control by requiring parties not to close any transactions subject to merger review prior to receiving approval from the CADE. Penalties for non-compliance range from R$60,000 to R$60 million (approximately US$32,000/€24,000 to US$32 million/€24 million).
New jurisdictional thresholds. According to the new law, a filing will be required when the following two turnover thresholds are met:
- A Brazilian turnover of R$400 million (approximately US$210.5 million/€163 million) for one of the applicants; and
- A Brazilian turnover of R$30 million (approximately US$15.8 million/€12 million) for another applicant.
These thresholds increase the local nexus required with Brazil. However, as under current law, the turnover of the entire group of both the seller and the buyer must be considered. As a result, if a subsidiary of a parent group with Brazil turnover in excess of the threshold is being sold, the threshold is met even though the target subsidiary itself may not meet the threshold.
Furthermore, the market share test is eliminated.
Shorter review deadlines. The new law provides for a shorter merger review time frame. The CADE’s merger assessment will take a maximum of 240 days, although this deadline can be extended by an additional 60 days at the request of the applicants or by an additional 90 days by the CADE on the basis of a reasoned justification.