Cade publishes new version of its Horizontal Mergers Guidelines
On July 27, Brazil’s Administrative Council for Economic Defense (‘Conselho Administrativo de Defesa Econômica’ / ‘Cade’) published the new version of its ‘Horizontal Mergers Guidelines’ (‘Guia de Análise de Atos de Concentração Horizontal’), also known as the ‘Guia H’, which was being updated since 2007, and to which the public were invited to contribute through public consultations held between March 17 and April 30 this year.
The guide, whose first version was published in 2001, is designed to clarify the methodology used by the government authority when analyzing mergers involving companies belonging to the same stage of the production chain, that is, operations that involve the economic merger of competing, or potentially competitive, companies, and has the following objectives:
- To provide greater transparency to the analysis procedures conducted by Cade;
- To provide guidance for the members of Cade in their employment of best practices in their economic analysis of merger acts that lead to horizontal mergers; and
- To assist market agents in their understanding of the stages, methods and criteria adopted in the analyses performed by Cade.
The document incorporates the best competition practices on the subject, including methodologies adopted in North America and Europe, and introduces new methods such as counterfactual and potential competition analysis, as well as consideration of companies operating in markets on two fronts, amongst others, in addition to the classic model ‘structure, conduct and performance’.
The new Guide also includes considerations regarding non-competition clauses and criteria that can be used in the analysis of mergers performed whilst companies are under judicial restructuring, including criteria for the application of the so-called ‘Failing Firm Defense’.
It is important to note that the methodology presented by the Guide is not mandatory or binding, nor does it exhaust the possible analysis methods open to Cade, which will always depend upon the case in question.
The competition law team at Felsberg Advogados is available for any further clarifications and information which may be necessary.
COMPETITION LAW DEPARTMENT
This article is of a solely informative nature, and does not contain any opinion, recommendation or legal advice from Felsberg Advogados concerning the subject matter covered.