Brazil: Merger Control

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This country-specific Q&A provides an overview to merger control laws and regulations that may occur in Brazil.

It will cover jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.

This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit

  1. Overview

    The Brazilian Antitrust System is governed by Federal Act No. 12,529/2011. It structures the Brazilian System for Protection of Competition, giving the authority to judge acts of concentration to the Brazilian Administrative Council for the Defense of Competition (CADE). This new law reformulates the system of concentration control, giving that the previous structure, determined by Federal Act. No. 8.884/1994, was quite different from the one in which Brazil operates nowadays.

    Before 2012, when the new act came into force, the concentration control could take place only after the act of concentration was concluded. Under the new act, the parties must file notification to CADE before the conclusion of the act of concentration.

    Even though the current act has been in effect for only 6 years, it is safe to say the system is active and functional, which contributes for a solid market for mergers.

  2. Is mandatory notification compulsory or voluntary?

    The following acts shall be considered concentration acts: I - two or more previously independent companies merge; II – one or more companies acquire, directly or indirectly, by purchase or exchange of stocks, shares, bonds or securities convertible into stocks or assets, whether tangible or intangible, by contract or by any other means or way, the control or parts of one or more companies; III – one or more companies incorporate one or more companies, or IV - two or more companies enter into an associative contract, consortium or joint venture.

    Those concentration acts must be submitted to CADE if they have both of the following characteristics:

    1. at least one of the groups involved in the transaction has registered, in the last balance sheet, annual gross sales or total turnover in the country, in the year preceding the transaction, equivalent or superior to four hundred million reais (R$ 400,000,000.00); and
    2. II - at least one other group involved in the transaction has registered, in the last balance sheet, gross annual sales or total turnover in the country, in the year preceding the transaction, equivalent to or greater than thirty million reais (R$ 30,000,000.00).

    If the act of concentration falls under these requirements, the parties involved must notify CADE of the act, before its conclusion. The initiative to do so falls over the parties, however, failure to notify will bring about penalties to the parties who omitted the act from the authority, as we will see below.

  3. What are the conditions of the test for control?

    The following conditions are analyzed: Relevant market, concentration level and unilateral effects.

    As for the relevant market, it is the process to identify the economic agents (both consumers and producers) that effectively react to and limit the decisions on price strategy, quantity, quality and other aspects of the company that the merger created. The tests applied to verify the relevant market are: Hypothetical Monopolist Test and Hypothetical Monopsonist Test .

    Regarding the concentration level analysis, CADE evaluates the market participation of the involved players. The merging companies shall inform CADE the quantity of supplies sold to their competitors and, when applicable, how much of that margin can be reflected on their competitors’ market share. The test applied to verify the concentration level is the Herfindahl-Hirschman rate, which examines the causal link between the merger and the existing concentration.

    The third and last condition to be analyzed is the unilateral effects, in which CADE will take up entrance analysis, competition analysis, analysis of the power associated and portfolio.

    Furthermore, CADE will ascertain the possible efficiency gains – probable and verifiable benefits, well-being of the consumer, specific efficiency and externalities.

    Other factors analyzed are: elimination of mavericks, potential competition, vertical integration Vs. horizontal overlapping; if the company engages in both sides of a specific market and partial acquisitions.

  4. What are the conditions on minority interest in your jurisdiction?

    The conditions for minority interest are dictated in Articles 9 and 10 of CADE’s resolution No. 09/2014, to which the acquisition of parts of a company without acquisition of control -- either unitary or shared -- need to be notified to CADE if:

    (I) the acquisition grants the owner direct or indirect ownership of 20% or more of the company’s share capital or voting capital;

    (II) In cases where the company is a competitor or acts in a vertically related market:

    1. If the buyer, directly or indirectly, obtains 5% or more of the share capital or the voting capital;
    2. If the last acquisition, individually or aggregated to the previous ones, results in a participation of the investing company in the invested company of 5% or more, if the investing company already owns 5% or more of the share capital or the voting capital.
  5. What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?

    Article 88 of the Brazilian Antitrust Act establishes that acts of concentration will be judged based on annual gross sales or turn over, in the terms described in the answer to question 2. Market share will also be analyzed, through a Herfindahl-Hirschman test.

  6. How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?

    See the answer to question 2 for the main thresholds; for market-share analysis, CADE applies the Herfindahl-Hirschman test -- see the answer to question 4.

  7. Is there a particular exchange rate required to be used for turnover thresholds and asset values?

    The law and CADE’s regulations do not regulate this subject. However, previous CADE’s decisions have already established that the exchange rate to be taken into account to verify the parties’ revenue is the one in place in December 31st of the previous year (as Brazil adopts a floating exchange rate system).

  8. Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?

    Yes, article 90, IV, of the Brazilian Antitrust Act states the following:

    Art. 90. For the purposes of Article 88 of this Law, a concentration act shall be carried out when:

    IV - two (2) or more companies enter into an associative contract, consortium or joint venture.

    Sole paragraph. What is described in item IV of the caput, when used for bids promoted by direct and indirect public administration and for contracts arising there from, shall not be considered concentration acts.

  9. In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?

    No, the thresholds do not vary, but it must be noted that Brazil will only analyze acts of concentration that generate or may reasonably generate impact in Brazil.

  10. For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?

    N/A, as Brazil imposes mandatory filing.

  11. Additional information: Jurisdictional Test

    N/A, as Brazil imposes mandatory filing.

  12. What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?

    Please refer to the answer to question 4.

  13. Are non-competitive factors relevant?

    Yes, CADE will take into account non-competitive factors. According to the introduction of the authority’s guide on horizontal concentration acts, CADE operates on a notion that mergers create positive and negative effects, including for instance the introduction of a better technology in the market, a better quality of the products/services offered, bigger number of products offered in the market, etc.

  14. Are there different tests that apply to particular sectors?

    No, the tests are basically the same. However, CADE will ponder the relevant market in its analysis, so, for example, the analysis of the relevant market of homogenous products will not be the same as products with different qualities.

  15. Are ancillary restraints covered by the authority’s clearance decision?

    CADE will take into account some ancillary restraints, but it must be noted that those restraints will be accepted or not depending on the case. For instance, Non-compete clauses are considered a burden to free market, however they are welcome if their intention is to secure a commercial fund or enable a joint-venture, provided that the party presents documented proof that it is facing financial crisis, for example going through a bankruptcy procedure, and that the clause is valid for up to 5 years and limited to the market of operation.

    Also, if the General Superintendence of CADE votes against the merger, the companies can present an agreement on control of concentration acts within 30 days, in which the parties suggest a remedy to secure a merger in aspects that could be a potential cause for CADE’s Tribunal not to clear the merger. This institute is used with a certain frequency and CADE is open to that possibility.

  16. What is the earliest time or stage in the transaction at which a notification can be made?

    There is no specific mention of an early stage for filing. If the transaction falls under the criteria posed in question 2, it is mandatory to file a notification before the merger takes place. However, it is important to note that CADE has already accepted and analyzed a transaction in which the parties decided to file a preventive notification, given that, in spite of the criteria in article 88 of the Brazilian Antitrust Law having not being met, still the market share of the merger company would justify such preventive measure.

  17. For mandatory filing regimes, is there a statutory deadline for notification of the transaction?

    The current Brazilian Antitrust Act does not estipulate a statutory deadline for notification of the transaction. That is because this new act establishes mandatory previous notification of acts of concentration. The previous act, not valid nowadays, did set up a deadline of 15 business days from the merger date to file a notification (article 54, paragraph 4 of the previous antitrust law).

  18. What is the basic timetable for the authority’s review?

    Chapter 2 of the Brazilian Antitrust Act establishes the basic timetable for the authority’s review.

    After the notification is sent to CADE, an administrative procedure initiates at CADE’s General Superintendence. This initial procedure constitutes in a formal analysis of the notification. If the formalities were not met, the Superintendence will ask to the requesting party to amend the request. Afterwards, the Superintendence shall directly acknowledge the request or determine that complementary fact-finding be performed. After the conclusion of the complementary fact-finding, the General Superintendence shall either render a decision approving the act without restrictions or present an objection to CADE, if it understands that the act must be rejected or be approved with restrictions, or if there is no conclusive elements in regards to its effects in the market.

    Within 48 hours after the Superintendence’s request, the case shall be randomly assigned to a Reporting Counselor. The applicant may offer a written petition, directed to the President of CADE, within thirty days of the issuance of the objection by the General Superintendence, exposing the findings of fact and matters of law against the objection to the concentration act by the General Superintendence.

    The Reporting Counselor will then either render a decision or require the performance of complementary fact finding, submitting the case to trial once the fact finding is complete.

    Within 15 days, the parties may appeal from CADE’s Decision. In case the General Superintendence approves the merger, CADE also may, within 15 days, request to analyze the case. In any of those cases, the Reporting Counselor shall, in 5 business days, review it and determine its submission to trial, dismiss it, or request further fact-finding procedures. Applicants may state their views about the appeal, within five (5) business days after such appeal is published by CADE or after the report is received with the conclusion obtained from the complementary fact-finding prepared by the General Superintendence, whichever occurs last.

    Article 88 of the Antitrust Act states that the merger control of acts of concentration shall have a maximum duration of 240 days from the filing date or its amendment, extendable for up to 90 days if CADE deems necessary.

  19. Under what circumstances the basic timetable may be extended, reset or frozen?

    In case the General Superintendence understands that the operation submitted is of a complex nature, it may request CADE to extend the 120 days term to finish the analysis (according to articles 56 and 88 paragraph 2 of the Brazilian Antitrust Law).

    However, the terms determined for the procedure shall not be suspended or interrupted for any reason, except in case of waiver, death or forfeiture of the Counselor’s term of office, or, upon the conclusion of the Counselor’s term of office, the number of members comprising the Court of CADE is reduced to less than four members. In those cases, the deadlines, as well as the processing of cases, shall be automatically suspended, and terms shall immediately be resumed upon reestablishment of the quorum. (article 63 and article 6 paragraph 5, of the Brazilian Antitrust Act).

  20. Are there any circumstances in which the review timetable can be shortened?

    Section 2 of the CADE Resolution No. 2/2012 dictates that an expedited procedure is available to cases in which there is less potential harm, due to the simplicity of the cases. The following cases may qualify for expedited procedures: (a) classic joint-ventures or cooperatives; (b) substitution of economic agent; (c) low market share with horizontal overlapping; (d) low market share with vertical integration; (e) lack of causual link, and in other cases CADE deems fit. According to CADE Resolution No. 16/2016, the General Superintendence will have a 30-day deadline to conclude expedited analysis.

  21. Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?

    Both parties are responsible for submitting the filing in these cases.

  22. What information is required in the filing form?

    The information required in the form for the regular (non-expedited) notification can be separated in 12 different parts, which are the following: (I) description of the transaction (II) information related to the relevant parties (III) aspects related to the transaction (IV) Documents related to the transaction and to the relevant parties (V) definition of the relevant markets (VI) Supply structure analysis (VII) demand structure analysis (VIII) analysis of the monopsony power related to the transaction (IX)Analysis of entry conditions and competition (X)Analysis of coordinated power, which takes into consideration the relevant markets previously indicated (XI) Contrafactual material – a description of the probable configuration of the relevant market if the transaction does not take place (XII) final notes .

  23. Which supporting documents, if any, must be filed with the authority?

    The following documents are mandatory, besides the agreement(s) which embody the transaction itself:

    a) Copy of the final version of all the contractual instruments, listing the supporting documents submitted;

    b) Shareholders’ agreement and non-competition agreement, if there is any;

    c) Copy of analysis, reports, studies, inquiries and presentations drafted by any member of the management and fiscal boards, the general shareholders meeting or anyone with similar attributions;

    d) Documents that were generated due to the transaction, such as: agreements for supplying imputs, minutes of the meetings related to the transaction; documents related to the IPO -- if any -- sent to the Brazilian Securities and Exchange Commission (CVM).

  24. Is there a filing fee? If so, please specify the amount in local currency.

    The official fees to request approval of economic concentration operation are 85,000.00 Brazilian Reais.

  25. Is there a public announcement that a notification has been filed?

    The Brazilian legal system demands that, apart from confidential information, all documents and acts enacted by government agencies shall be public. With that in mind, usually the parties file a notification at CADE in 2 separate documents: a complete document, containing all the mandatory data for CADE’s analysis, and a second version of the same notification, “for the public eyes”, which does not contain sensitive information, requesting that only the public version be publicized.

  26. Does the authority seek or invite the views of third parties?

    CADE may subpoena third parties to provide clarification, and article 41 of the Brazilian Antitrust Law determines that unjustified absence shall be punishable to a fine of five hundred reais (R$ 500.00) to fifteen thousand reais (R$ 15,000.00) for each omission.

  27. What information may be published by the authority or made available to third parties?

    Article 91 of CADE’s internal regulation determines that CADE will publicize the documents and parts of it that are strictly necessary for the understanding of the case. However, article 92 establishes that parties may request that CADE institutes secrecy treatment for documents on the grounds of a legal provision or due to information that may harm the company, giving third-parties an unjustified competitive advantage, such as information on clients, date value and payment method of the operation in question, etc..

  28. Does the authority cooperate with antitrust authorities in other jurisdictions?

    Yes, the internal regulations of CADE stipulate, on article 60, XXIII, that the president of CADE’s Court shall execute and obtain mutual cooperation and the exchange of information with antitrust authorities in other jurisdictions and international authorities on the matter, based on reciprocity. Furthermore, paragraph 1st of the mentioned article determines that the information obtained through such method can be classified as confidential. CADE may refuse to cooperate with other jurisdictions if there is a matter of public interest of Brazil involved.

  29. What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?

    CADE accepts and imposes both structural and behavioral remedies. In fact, throughout the years, the antitrust authority has combined both sorts of remedies numerous times, proving this is a valuable asset to concentration control in Brazil.

  30. What procedure applies in the event that remedies are required in order to secure clearance?

    In case the parties wish to submit a proposal of agreement to control acts of concentration (ACC, in Portuguese), they are entitled to do so within 30 days from the date that the Superintendence votes for not clearing the transaction. The ACC will be submitted to CADE’s Court, which can request for amendments or freely accept or reject it.

    Parties may appeal from the decision if they understand that the remedies applied by CADE’s Tribunal were not necessary or are too burdensome.

  31. What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?

    Failure to notify or ignoring a prohibition on closing is considered gun jumping, which is expressly forbidden by the Brazilian Antitrust Law. CADE may declare the concentration control act as invalid, open an administrative procedure against the involving parties and impose a fine that ranges between 60,000.00 Brazilian Reais and 60,000,000.00 Brazilian Reais.

    There is no such thing as a late notification once the law does not estipulate deadlines for sending a notification to the antitrust authority.

  32. What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?

    According to article 62 of the Brazilian Antitrust Act, in case of refusal, omission, deceitfulness, falsity or unjustified delay, by the applicants, with regards to the submission of information or documents required by Cade, without prejudice to the other applicable sanctions, the petition for approval of the act of economic concentration may be rejected due to lack of evidence, in which case the applicant may only perform the act upon submission of a new petition.

    Furthermore, article 91 determines that the approval may be reviewed by CADE, ex officio or upon request of the General Superintendence, if the decision is based on false or misleading information provided by the interested party, in case of noncompliance with any of its obligations, or if the intended benefits are not achieved. Falsity or deceitfulness shall be punished with a pecuniary fine, equivalent to not less than sixty thousand Brazilian Reais (R$ 60,000.00) nor more than six million Brazilian Reais (R$ 6,000,000.00)

    In addition, article 299 of the Brazilian Criminal Code determines that ideological falsehood, that is, omitting in a document a statement that should be included, or including a false statement in it in order to alter true information, create obligations or undermine rights, is a crime punishable with imprisonment, even if the document at stake is of private nature.

  33. Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?

    Yes, any administrative decision may be appealed to a judicial court, either by the parties involved or third-parties with legitimate interest and standing to sue (according to article 17 of the Brazilian code of Civil Procedure).

  34. What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?

    The trend in merger cases in Brazil seems to be in favor of approving the agreements, provided that mergers and acquisitions have positive aspects in the economy and the market itself and CADE is whiling to leave the free market dictate its ways. In order to counter-balance the negative aspects of major mergers, the antitrust authority effectively makes use of different remedies that mitigate possible negative outcomes. As a recent example, in the recent Dow/Dupont merger, CADE has approved the operation based in a deal presented by the parties, which foresees the disinvestment in assets related to seed corns.

  35. Are there any future developments or planned reforms of the merger control regime in your jurisdiction?

    The regime is very recent, so the law will most likely not change in a near future. On the other hand, CADE is working on issuing informative material so that parties can be more informed, and a remedies guide should be released soon to the public, raising legal security in this field.