Changes in the Brazilian merger review system
On May 29, 2012, Law nr. 12.529/2011 entered into effect, changing the merger review system previously established by Law nr. 8.884/94. As of this date, the review of the transactions by the Administrative Council for Economic Defense – CADE – will take place prior to their consummation, which means that the transactions that are subject to mandatory notification to CADE may not be completed before receiving the approval of this Council.
Law nr. 12.529/2011 also presented alterations in relation to the criteria for the mandatory notification of concentration acts to CADE. Article 88 of the law establishes that notification should be submitted regarding those transactions in which the parties involved cumulatively meet the following criteria:
(i) at least one of the groups involved in the transaction had gross revenues or total business in Brazil equal to or higher than four hundred million Reais (R$400,000,000.00) in the year immediately preceding the transaction; and
(ii) at least one other group that is a party to the transaction had gross revenues or total business in Brazil equal to or higher than thirty million Reais (R$30,000,000.00) in the year immediately preceding the transaction.
§1 of article 88 of Law nr. 12.529/2011 sets out the possibility that the abovementioned sums may be updated, simultaneously or independently, by an inter-ministerial administrative ruling from the Ministry of State, Ministry of Finance and Ministry of Justice, following suggestion from the CADE Council.
On May 31, 2012, Inter-Ministerial Administrative Ruling nr. 994/12 issued by the Ministry of Finance and the Ministry of Justice changed the sums outlined in article 88, I and II of Law 12.529/2011. As of the publication of the above mentioned Administrative Ruling, for the purposes of mandatory notification of the concentration acts to CADE, the minimum amounts of gross annual revenues or total volume of business in Brazil in the year immediately preceding the transaction became R$ 750,000,000.00 (seven hundred and fifty million Reais) and R$ 75,000,000.00 (seventy five million Reais) respectively.
It should also be stressed that transactions performed after May 29 this year will be analyzed in accordance with the guidelines and procedures defined by Law nr. 12.529/2011. However, for those transactions performed up until May 28, Law nr. 8.884/94 will apply, including in relation to the deadlines for the notification of the transaction and the hypotheses involving the suspension of these deadlines, amongst other regulations, as established by art. 221 of CADE’s Internal Regulations, as approved by the Council’s Board on May 29, 2012.
Also in accordance with CADE’s Internal Regulations, the transactions that are subject to mandatory notification performed on May 28, 2012 will be considered to have been timely submitted as long as they are notified to CADE by June 19, 2012 (15 business days after May 28, 2012), without the application of the fine for untimely submission established in article 54, §5 of Law nr. 8.884/94.
The Corporate Finance Department of Felsberg e Associados remains at your entire disposal to assist in any way you may feel necessary.
CORPORATE FINANCE DEPARTMENT
FELSBERG E ASSOCIADOS