On July 9th, 2014, Judge Dias Toffoli of the Brazilian Supreme Court of Justice, decided in the BCN v. Administrative Council for Economic Defense (CADE) case (Appeal No. 664.189), that the Brazilian Central Bank (BC) has exclusive jurisdiction to analyze and rule on antitrust matters concerning mergers and acquisition transactions between financial institutions.

The dispute between these two institutions (BC and CADE) is coming to an end. It began between 2001 and 2002, when CADE recalled the jurisdiction of the analysis that the BC had been carrying out exclusively until then. The argument is that the Brazilian antitrust law (Law No. 8.884/84 at the time, but since replaced by Law No. 12.529/11) did not specify what kind of market CADE would be able to investigate, opening the opportunity for CADE to investigate all sectors and industries, including financial activities. However, Law No. 4.595/64 states, in Article 10, item X, sections ‘a’, ‘c’ and ‘g’, that the BC is the only agency that has jurisdiction to analyze mergers, acquisitions, or any kind of sale and purchase transactions between financial institutions.

This discussion relates to the decision on which law should be applicable and, therefore, which agency should hold jurisdiction for the antitrust analysis concerning financial institutions. The Brazilian Superior Court of Justice had decided in 2009 that the BC was the agency with jurisdiction to investigate those cases, being the only one able to decide on transactions involving financial institutions. After that, CADE appealed to the Brazilian Supreme Court.

In response to CADE’s appeal, the Supreme Court decided, on a preliminary order, that the conclusion of the Superior Court of Justice should prevail, since the Supreme Court does not have jurisdiction to analyze the merits of the case. According to the Brazilian Supreme Court case law, the chances of CADE reverting this understanding are remote.

In other words, it is likely that the final decision would state that the agency with jurisdiction to decide on transactions involving financial institutions is the BC and not CADE.