Merger Control 2021

Featuring contributions from:

Advokatfirmaet Grette AS

AlixPartners

ALRUD Law Firm

AMW & Co. Legal Practitioners

AnesuBryan & David

Arthur Cox

Ashurst LLP

Blake, Cassels & Graydon LLP

BUNTSCHECK Rechtsanwaltsgesellschaft mbH

DeHeng Law Offices

Dittmar & Indrenius

DORDA Rechtsanwälte GmbH

Drew & Napier LLC

ELIG Gürkaynak Attorneys-at-Law

Hannes Snellman Attorneys Ltd

L&L Partners Law Offices

Lee and Li, Attorneys-at-Law

LNT & Partners

MinterEllison

Moravčević, Vojnović i Partneri AOD Beograd in cooperation with Schoenherr

MPR Partners | Maravela, Popescu & Asociații

MSB Associates

Nagashima Ohno & Tsunematsu

Norton Rose Fulbright South Africa Inc

OLIVARES

Pinheiro Neto Advogados

Portolano Cavallo

PUNUKA Attorneys & Solicitors

Schellenberg Wittmer Ltd

Schoenherr

Shin & Kim LLC

Sidley Austin LLP

URBAN STEINECKER GAŠPEREC BOŠANSKÝ

Zdolšek Attorneys at law

A practical cross-border insight into merger control issues

17th Edition

Table of Contents

9 The Trend Towards Increasing Intervention in UK Merger Control and Cases that Buck the TrendBen Forbes, Felix Hammeke & Mat Hughes, AlixPartners

Expert Chapters

1 Reform or Revolution? The Approach to Assessing Digital MergersDavid Wirth & Nigel Parr, Ashurst LLP

18 AlbaniaSchoenherr: Srđana Petronijević, Danijel Stevanović & Jelena Obradović

Q&A Chapters

27 AustraliaMinterEllison: Geoff Carter & Miranda Noble

36 AustriaDORDA Rechtsanwälte GmbH: Heinrich Kühnert & Lisa Todeschini

43 Bosnia & HerzegovinaSchoenherr: Srđana Petronijević, Danijel Stevanović & Minela Šehović

52 BrazilPinheiro Neto Advogados: Leonardo Rocha e Silva & José Rubens Battazza Iasbech

60 CanadaBlake, Cassels & Graydon LLP: Julie Soloway & Corinne Xu

70 ChinaDeHeng Law Offices: Ding Liang

83 CroatiaSchoenherr: Ana Marjančić

92 European UnionSidley Austin LLP: Steve Spinks & Ken Daly

107 FinlandDittmar & Indrenius: Ilkka Leppihalme & Katrin Puolakainen

119 FranceAshurst LLP: Christophe Lemaire & Marie Florent

131 GermanyBUNTSCHECK Rechtsanwaltsgesellschaft mbH: Dr. Tatjana Mühlbach & Dr. Andreas Boos

141 GreeceMSB Associates: Efthymios Bourtzalas

151 IndiaL&L Partners Law Offices: Gurdev Raj Bhatia & Kanika Chaudhary Nayar

162 IrelandArthur Cox: Richard Ryan & Patrick Horan

172 ItalyPortolano Cavallo: Enzo Marasà & Irene Picciano

182 JapanNagashima Ohno & Tsunematsu: Ryohei Tanaka & Kota Suzuki

191 KoreaShin & Kim LLC: John H. Choi & Sangdon Lee

198 MexicoOLIVARES: Gustavo A. Alcocer & José Miguel Lecumberri Blanco

205 MontenegroMoravčević, Vojnović i Partneri AOD Beograd in cooperation with Schoenherr: Srđana Petronijević, Danijel Stevanović & Zoran Šoljaga

213 NigeriaPUNUKA Attorneys & Solicitors: Anthony Idigbe, Ebelechukwu Enedah & Tobenna Nnamani

223 North MacedoniaSchoenherr: Srđana Petronijević, Danijel Stevanović & Jelena Obradović

232 NorwayAdvokatfirmaet Grette AS: Odd Stemsrud & Marie Braadland

239 RomaniaMPR Partners | Maravela, Popescu & Asociații: Alina Popescu & Magda Grigore

247 RussiaALRUD Law Firm: Vladislav Alifirov, Alexander Artemenko & Dmitry Domnin

254 SerbiaMoravčević, Vojnović i Partneri AOD Beograd in cooperation with Schoenherr: Srđana Petronijević, Danijel Stevanović & Jelena Obradović

264 SingaporeDrew & Napier LLC: Lim Chong Kin & Dr. Corinne Chew

276 SlovakiaURBAN STEINECKER GAŠPEREC BOŠANSKÝ: Ivan Gašperec & Juraj Steinecker

284 SloveniaZdolšek Attorneys at law: Stojan Zdolšek & Katja Zdolšek

293 South AfricaNorton Rose Fulbright South Africa Inc: Rosalind Lake & Julia Sham

Table of Contents

304 SwedenHannes Snellman Attorneys Ltd: Peter Forsberg, David Olander & Johan Holmquist

311 SwitzerlandSchellenberg Wittmer Ltd: David Mamane & Amalie Wijesundera

320 TaiwanLee and Li, Attorneys-at-Law: Stephen Wu & Yvonne Hsieh

328 TurkeyELIG Gürkaynak Attorneys-at-Law: Gönenç Gürkaynak & Öznur İnanılır

336 United KingdomAshurst LLP: Nigel Parr, Duncan Liddell & Alexi Dimitriou

355 USASidley Austin LLP: James W. Lowe & Elizabeth Chen

364 VietnamLNT & Partners: Dr. Nguyen Anh Tuan, Tran Hai Thinh & Tran Hoang My

373 ZambiaAMW & Co. Legal Practitioners: Nakasamba Banda-Chanda, Namaala Liebenthal & Victoria Dean

380 ZimbabweAnesuBryan & David: Patrick Jonhera, Itai Chirume & Bright Machekana

Q&A Chapters Continued

Merger Control 2021

Chapter 752

Brazil

Pinheiro Neto Advogados José Rubens Battazza Iasbech

Leonardo Rocha e Silva

Brazil

© Published and reproduced with kind permission by Global Legal Group Ltd, London

securities, insurance, aviation) may require clearance from both regulated bodies and CADE. In February 2018, CADE and the Brazilian Central Bank regulated their respective roles in bank merger control cases, which are reportable to both agen-cies. CADE’s decision should be in line with the Central Bank’s ruling on deals that generate “high and imminent” risks to the Brazilian banking system.

1.5 Is there any other relevant legislation for mergers which might not be in the national interest?

No, there is not.

2 Transactions Caught by Merger Control Legislation

2.1 Which types of transaction are caught – in particular, what constitutes a “merger” and how is the concept of “control” defined?

Under the 2011 Competition Act, the following transactions/events qualify for CADE’s review (on reaching the turnover thresholds): (a) a merger involving two or more companies that were independent until then; (b) an acquisition of control over or parts of one or more companies – by purchase or swap of shares, membership units (quotas), securities or share convertibles, or tangible or intangible assets, by operation of contract or other-wise; (c) when one or more companies absorb another company or companies; or (d) when two or more companies enter into an association, consortium or joint venture agreement. For CADE, “control” involves the ability to interfere in the decision-making process related to commercially sensitive issues of a company.

2.2 Can the acquisition of a minority shareholding amount to a “merger”?

The acquisition of a minority shareholding qualifies for CADE’s review in the following events: ■ I –when the investee is not a competitor or active in a

vertically-related market: (a) acquisition conferring upon the acquirer the direct or indirect ownership of 20% or more of the capital stock or voting capital of the investee; and (b) acquisition by an owner of 20% or more of the total or voting capital, provided that the ownership interest directly or indirectly acquired, from at least one seller taken individually, equals or exceeds 20% of the total or voting capital; or

1 Relevant Authorities and Legislation

1.1 Who is/are the relevant merger authority(ies)?

CADE, the Administrative Council for Economic Defence, is the primary competition authority, an independent body whose leading members are appointed by the President of the Republic and approved by the Federal Senate. As from 2012, CADE’s General Superintendence is tasked with examining and approving complex and non-complex transactions, being also in charge of referring complex transactions to CADE’s Administrative Tribunal for a final decision whenever it understands that the deal should be blocked or cleared with restrictions/remedies. CADE’s Tribunal comprises a president and six commissioners. CADE’s Department of Economic Studies (DEE) also plays an important role in complex merger reviews and remedy negotiations.

1.2 What is the merger legislation?

The 2011 Competition Act (Law No. 12,529) contains the primary merger control rules. Effective since May 2012, it introduced the mandatory pre-merger review process in Brazil. Several regula-tions issued by CADE since 2012 also apply to its merger review process – notably Regulation No. 2/2012, detailing the rules of its merger review procedure, including: minority acquisition exemptions; levels of disclosure for the review of complex and non-complex transactions; the definition of economic groups; and other issues. Additionally, Regulation No. 17/2016 provides for notification of associative agreements, and Regulation No. 24/2019 sets out the rules for the calculation of fines imputable to companies closing deals otherwise subject to mandatory notifica-tion without/before proper approval from CADE (gun-jumping). Further, CADE has issued guidelines on Gun-Jumping (2016), on the Assessment of Horizontal Mergers (2016), and on Remedies (2018).

1.3 Is there any other relevant legislation for foreign mergers?

No, there is not.

1.4 Is there any other relevant legislation for mergers in particular sectors?

The 2011 Competition Act applies to all economic sectors. Deals in regulated sectors (e.g., telecom, oil and gas, electricity,

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■ I–acquisitionofaminoritystakebythecontrollingshare-holder that already holds sole control of the target company;

■ II–consortiaor jointventurescreatedwith thespecificpurpose of participating in public bids;

■ III – pure “vertical agreements” (distribution, supply,manufacturing contracts, etc.), even those containing an exclusivity clause, unless they also involve an economic activity in which the companies are competitors; and

■ IV – associative agreements without at least one of thefollowing characteristics: (a) minimum duration of two years; (b) creation of a joint undertaking to pursue an economic activity; (c) sharing of the risks and results of the underlying economic activity; and (d) execution between parties (or economic groups) that are competitors in the pertinent rele-vant market.

2.8 Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions?

CADE’s rules remain silent on whether various stages of a trans-action constitute a single transaction or a series of transactions, subject to different notification criteria.

Although CADE has sometimes decided that multi-stage transactions qualify for single notification when all competitive conditions are predictable at the distinct negotiated stages (e.g., transactions involving acquisitions with a future put/call option provision), the parties should bear in mind that CADE would be interested in examining the market conditions at the moment of actual exercise of the put/call option(s), especially if it takes place in different years from the first notification.

3 Notification and its Impact on the Transaction Timetable

3.1 Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?

Notification is compulsory where the jurisdictional thresholds are met. The 2011 Competition Act establishes no deadline for notification, but conditions the closing of the deal on CADE’s prior approval.

3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.

CADE has ruled that even transactions involving economic groups falling into the turnover criterion (see above) may be exempted from mandatory notification if the relevant markets involved are local/limited to certain regions, i.e., products/services would not potentially reach Brazil in view of their nature (geographic limitation).

3.3 Where a merger technically requires notification and clearance, what are the risks of not filing? Are there any formal sanctions?

Failure to notify a reportable transaction is punishable with voidability, a fine between R$ 60,000 and R$ 60 million and the initiation of an administrative proceeding for the imposition of

■ II–whentheinvesteeisacompetitororactiveinaverti-cally-related market: (a) acquisition conferring a direct or indirect ownership interest of at least 5% of the total or voting capital; and (b) most recent acquisition which, individually or together with others, results in an increase in ownership interest at or above 5%, where the investor already holds 5% or more of the total or voting capital of the investee.

2.3 Are joint ventures subject to merger control?

Yes, if they have an effect on Brazilian markets and the economic groups involved reach the turnover thresholds. The 2011 Competition Act exempts only joint ventures for the specific purpose of participating in public bids.

2.4 What are the jurisdictional thresholds for application of merger control?

Merger control in Brazil applies when the following thresholds are met: (a) at least one of the groups involved in the deal has posted, on the latest balance sheet, an annual gross turnover or overall volume of business in Brazil at or above R$ 750 million, in the year before that of the deal; (b) at least another group involved in the deal has posted, on the latest balance sheet, an annual gross turnover or overall volume of business in Brazil at or above R$ 75 million, in the year before that of the deal; and (c) the proposed merger/deal has or may have effects in Brazil.

In relation to the effects test, CADE has decided that even transactions involving economic groups that have met the turn-over thresholds in Brazil do not qualify for mandatory notifica-tion if the pertinent relevant markets are local/limited to certain regions, i.e. the products/services involved would not poten-tially reach Brazil in view of their nature (geographic limitation).

2.5 Does merger control apply in the absence of a substantive overlap?

Yes, even in the absence of a substantive overlap in which the deal would lead to control of less than 20% in the relevant market. A fast-track review procedure is then available to the parties.

2.6 In what circumstances is it likely that transactions between parties outside your jurisdiction (“foreign-to-foreign” transactions) would be caught by your merger control legislation?

Transactions “wholly or partially performed within the Brazilian territory” are caught by the Brazilian merger control rules if the parties’ economic groups reach the turnover thresholds and “the effects of [such deals] are or may be felt in Brazil”. In Bosch/HeFei, for instance, CADE expressly ruled that mandatory noti-fication “requires the actual or potential occurrence of effects in Brazil”. Hence, a transaction that “does not produce or is unable to produce effects in Brazil” does not qualify for manda-tory notification.

2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.

Exemption from notification may apply (even when the jurisdic-tional thresholds are met) in the following events:

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condition of the parties, wilful misconduct, bad faith and poten-tial anticompetitive effects, among others) and, if applicable, the commencement of an administrative proceeding against the parties.

For greater legal certainty regarding the calculation of the financial redress for gun-jumping violations, CADE enacted in 2019 Regulation No. 24/2019, which sets forth the following methodology for calculating the fines for gun-jumping viola-tions. The base penalty will be set at the minimum (R$ 60,000). Then, CADE will consider aggravating factors (such as dura-tion of the violation, seriousness of the conduct, intent); and will reduce the amount vis-à-vis the moment when the transaction is notified.

Additionally, CADE’s Internal Rules establish that the parties, upon notification or after opposition by CADE’s General Superintendence, may request a temporary and preliminary authorisation to perform the concentration act whenever, cumu-latively: (i) there is no risk of irreparable damage to competition conditions in the market; (ii) the measures for which an authorisa-tion is sought are fully reversible; and (iii) the applicant successfully demonstrates the impending occurrence of substantial and irre-versible financial losses to the acquired company unless temporary authorisation is granted for completion of the merger deal.

3.8 Where notification is required, is there a prescribed format?

Yes, there are two set forms for notification: one for non-complex transactions (eligible for the fast-track review procedure); and another for transactions not qualifying for the fast-track proce-dure under CADE’s rules.

3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any informal ways in which the clearance timetable can be speeded up?

A fast-track review procedure applies when: ■ I–twoormoreseparatecompaniessetupajointventure

under common control solely and exclusively to pursue a share in markets where products/services are not horizon-tally or vertically related;

■ II– the acquireror its groupdidnotparticipate,beforethe act, in the market involved, or in the vertically-related markets, or in other markets where the acquiree or its group operated;

■ III–thedealleadstocontroloflessthan20%intherele-vant market;

■ IV–noneoftheapplicantsortheirrespectiveeconomicgroups control more than 30% in any of the vertically inte-grated relevant markets; or

■ V–thehighhorizontaloverlapsarenotadirectresultofthe deal (Herfindahl–Hirschman Index (HHI) variation is inferior to 200, provided that the deal entails no control above 50% over a portion of the relevant market).

The parties can try to speed up the process by providing addi-tional information on the deal and on the parties and markets involved, and by engaging in conversations with the authorities.

3.10 Who is responsible for making the notification?

CADE’s Regulation No. 2/2012 establishes that, whenever possible, notifications must be jointly made by the parties involved in the deal.

sanctions due to violations of the economic order. The meth-odology for the calculation of the applicable fine is set forth by Regulation No. 24/2019.

3.4 Is it possible to carve out local completion of a merger to avoid delaying global completion?

CADE has already ruled against carve-out arrangements, which may be fined up to R$ 60 million.

In the Cisco/Technicolor merger, CADE understood that the parties’ press release indicating that they had carved out Brazil and closed the deal in the rest of the world while the merger was still under review by CADE, constituted gun-jumping. CADE’s Tribunal expressly stated that carve-out of local completion of a merger is not accepted, and executed an agreement with the companies where they agreed to pay a R$ 30 million contribu-tion for gun-jumping.

From 17 July to 7 October 2019, CADE was faced with the lack of a minimum quorum by its Tribunal, resulting in the stay of all procedural terms until the quorum was re-established. No mergers approved during this period were allowed to close. Global mergers were affected by this stay, like the IBM/Red Hat merger. Despite the stay of the terms, IBM/Red Hat announced the closing of the merger in July 2019 and later settled a gun-jumping investi-gation by paying a contribution of R$ 57 million.

3.5 At what stage in the transaction timetable can the notification be filed?

Parties normally notify after the execution of the binding agree-ments but, in some cases, CADE has accepted notification based on a memorandum of understanding or term sheet containing sufficient information on the competitive aspects of the deal. The parties must forthwith report on supervening changes to the initial notification, if applicable.

3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process? Can the timeframe be suspended by the authority?

CADE’s General Superintendence has 30 days to review trans-actions under the fast-track procedure, counting from the filing of the notification (or amended notification, if any). On average, CADE has completed fast-track procedures in less than 20 days. CADE cannot stay the timeframe but can call on the parties to amend the notification, resetting the countdown. CADE has 240 days to review transactions not qualifying for the fast-track procedure (extendable up to an additional 90 days for complex transactions). CADE has taken 60–90 days on average to review them. In the case of a lack of the minimum quorum of CADE’s Tribunal due to the end of the terms of at least four commis-sioners, the timeframes are also stayed.

3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks in completing before clearance is received?

Completing a transaction qualifying for mandatory notification before clearance is prohibited. The parties cannot consummate the deal until CADE has completed its pre-merger review, under penalty of voidability and the imposition of a fine of between R$ 60,000 and R$ 60 million (depending on the economic

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factored in for clearance purposes. Based on CADE’s 2016 Guidelines on the Assessment of Horizontal Mergers, the transfer of relevant benefits to consumers is instrumental in CADE’s assessment of the effects of the alleged efficiencies.

4.3 Are non-competition issues taken into account in assessing the merger?

Non-competition issues are usually not taken into account in assessing the merger. Importantly enough, the Guidelines on the Assessment of Horizontal Mergers seem to enshrine CADE’s good practice of not including – overtly at least – in the merger review process, considerations such as employment mainte-nance/promotion, protection of national champions, industrial policy goals, financial stability, and other non-economic factors.

4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?

The 2011 Competition Act allows potential complainants to join in as “interested third parties”. The interested third party must do so within 15 days from the announcement of the transac-tion under merger review in the official gazette, putting forth all documents and expert opinions necessary to prove its claims (under exceptional circumstances and at its sole discretion, CADE’s General Superintendent may grant an additional 15 days when strictly necessary).

The interested third party may voice its opinion on the trans-action and prompt discussions and analyses to be conducted by CADE. Additionally, if CADE’s General Superintendence gives unconditional clearance for a deal, the interested third party can appeal this decision to CADE’s Tribunal, which will then re-examine the case and render a final ruling.

Alternatively, a company not acting as an interested third party may even so voice its opinions via responses to CADE’s requests for information.

4.5 What information gathering powers (and sanctions) does the merger authority enjoy in relation to the scrutiny of a merger?

CADE may issue official letters to the parties and to third parties (clients, suppliers, competitors, etc.), as well as to other authorities (regulatory agencies, etc.) requesting information and studies that could help in the merger review. Additionally, economic studies may be ordered from CADE’s DEE.

The use of false or misleading information for clearance of a merger by CADE is punishable by fines ranging from R$ 60,000 to R$ 60 million plus the commencement of an administrative proceeding against the offenders.

4.6 During the regulatory process, what provision is there for the protection of commercially sensitive information?

Article 51 of CADE’s Internal Rules (Regulation No. 22/2019) establishes that restricted access may be accorded to records, documents, effects, data and information involving: (i) commer-cial bookkeeping; (ii) the economic and financial condition of the company; (iii) tax or bank secrecy; (iv) company secrets; (v) production process and industrial secrets, notably indus-trial processes and formulas relating to product manufacture;

3.11 Are there any fees in relation to merger control?

A filing fee is payable at R$ 85,000 for CADE’s merger control to take place.

3.12 What impact, if any, do rules governing a public offer for a listed business have on the merger control clearance process in such cases?

According to CADE’s Regulation No. 2/2012, no prior approval from CADE is required for subscriptions in a public offer of convertible securities. However, no voting rights related to those securities are exercisable until CADE’s clearance.

3.13 Will the notification be published?

CADE publishes an announcement of notifications in the offi-cial gazette. The non-confidential versions of the notification form and other documents can be downloaded by the interested parties on CADE’s website after such publication.

4 Substantive Assessment of the Merger and Outcome of the Process

4.1 What is the substantive test against which a merger will be assessed?

CADE usually runs the hypothetical monopolist test and the hypothetical monopsonist test to define the relevant markets affected by the deals to assess whether the transaction would create or strengthen a dominant position and result in the less-ening of competition in the relevant market where concentration takes place, or else in the foreclosure and consequent exclusion of competitors and increase in prices. CADE examines whether negative effects outweigh positive effects in a merger. If the net effects of the transaction are not negative for consumers, then a merger fulfils the conditions to be cleared by CADE. In its analysis, CADE also looks into unilateral, coordinated and conglomerate effects.

CADE conducts quantitative analysis when companies’ combined market share exceeds 60% and their customers are complaining about market conditions. When the companies involved hold a combined market share of 30 to 60%, CADE normally carries out only qualitative analysis.

In relation to unilateral effects, CADE usually requests a great amount of data to evaluate barriers to entry, rivalry in the market, and portfolio power by the undertakings involved. CADE is very concerned about rivalry analysis and assesses important variables such as market concentration, market share variance, and growth of demand. CADE also looks into own-price elas-ticity of demand, cross-price elasticity of demand, own-price elasticity of supply, and vertical integration and portfolio. Other variables considered to be fundamental for CADE’s examina-tions were, for instance, pre- and after-sales services, access to efficient distributors and logistics services, funding, economies of scale and scope, use of idle capacity, and committed customers and points of sale.

4.2 To what extent are efficiency considerations taken into account?

Under the 2011 Competition Act, efficiencies are assessed and

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that is able to compete with Disney in the international sports-cast market; (ii) to license the “Fox” brand to the buyer for free; (iii) to sublicense sporting rights owned by Fox Sports to the buyer, in case the buyer prefers not to have the rights transferred; (iv) not to participate in new bids for sporting rights for a period; (v) not to poach employees being transferred and not to reac-quire the assets being sold; and (vi) to maintain current agree-ments with pay-TV operators. The companies were authorised to close the deal before the sale was made. According to CADE, given that the transaction was notified in 25 jurisdictions, inter-national cooperation with several antitrust authorities (such as the authorities in the US, Chile and Mexico) had an impor-tant role in securing higher review quality, the effectiveness of remedies and lower chances of conflicting or inconsistent deci-sions. However, in May 2020, as it was impossible to find poten-tial buyers for the divested business with sufficient economic size to conduct it and become an effective rival in the pay-TV linear sports channel production and licensing market in Brazil, CADE had to change its 2019 decision to approve a package of behavioural remedies.

5.4 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines.

The negotiation of remedies may commence upon notification until 30 days after an objection by CADE’s General Superintendence is issued, without prejudice to reviewing the deal on its merits.

If negotiation takes place with CADE’s General Superintendence, the resulting Merger Control Agreement (ACC) must be submitted to CADE’s Tribunal for approval. After approval of the ACC by CADE’s Tribunal (or if negotiation takes place with the Tribunal), the parties and CADE execute the ACC setting forth the condi-tions for clearance.

5.5 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?

Pursuant to CADE’s Remedies Guidelines, structural reme-dies must be considered a priority, as CADE considers that “the competitive problem ensues from the change in structure of a relevant market in mergers with overlaps and vertical integra-tions”. For CADE, effective remedies “are those that actu-ally solve the competitive concerns arising from a merger” and observe the following general principles: proportionality; time-liness; feasibility; and verifiability.

ACCs executed between the parties and CADE normally set the terms and deadlines for compliance with remedies, and may include (in case of divestments) the obligation to find a buyer within a certain period (usually three to six months). During this period, the obligations can be separated into categories, and can establish penalties and the loss of the applicants’ independ-ence in carrying out the remedy in case they do not fulfil their obligations.

The Remedies Guidelines also mention that after the conclu-sion of the sales agreement and before the actual transfer of the assets, the applicants must eliminate all links with the divested assets except to the extent otherwise indispensable for the sustain-ability of the remedy, which may involve regulatory authorisa-tions and/or licences (including supply contracts, use of distri-bution channels, or other contracts and relationships necessary for running the divested business). In such exceptional cases, the Remedies Guidelines indicate that post-sale links should be

(vi) turnover; (vii) transaction date, value and payment method; (viii) documents formalising the notified concentration act; (ix) the latest annual report prepared for shareholders or partners, except when the document is public; (x) value and volume of sales, and financial statements; (xi) customers and suppliers; (xii) installed capacity; (xiii) production costs and expenses with the research and development of new products or services; or (xiv) other events, at the discretion of the granting authority, and subject to the Information Access Act (Law No. 12,527/2011) and Decree No. 7,724/2012.

5 The End of the Process: Remedies, Appeals and Enforcement

5.1 How does the regulatory process end?

Upon unconditional clearance by CADE’s General Super-intendence, the parties must wait 15 days to close the trans-action. During such period, third parties may appeal against the decision and any of CADE’s Tribunal Commissioners may ask to review the transaction. In either scenario, or if CADE’s General Superintendence holds that the transaction should be rejected or cleared with conditions, for instance, the case files are sent to CADE’s Tribunal for analysis and the final decision.

After the Tribunal: (i) clears the transaction (a) uncondition-ally, or (b) conditionally on the imposition of restrictions (reme-dies); or (ii) blocks the deal, a short summary of the decision is published in the official gazette. If the deal eventually is given unconditional clearance and no motion for clarification (in cases of omission, ambiguity, contradiction, or material error) is filed, the parties may close it immediately after the publication of this decision. Upon conditional clearance, the parties must abide by the remedies imposed by/negotiated with the authority.

5.2 Where competition problems are identified, is it possible to negotiate “remedies” which are acceptable to the parties?

Yes, it is possible.

5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?

CADE has never imposed remedies for clearance of a pure foreign-to-foreign transaction.

It is worth mentioning that, in Disney/Fox, CADE condi-tioned its approval on the divestment of Fox Sports in Brazil. CADE’s General Superintendence concluded in December 2018 that the transaction could only be approved in Brazil upon the imposition of behavioural or structural remedies, due to the high concentration in the domestic sportscast market (Disney’s ESPN channel was the only possible competitor against Fox Sports and Globosat SporTV channels). While two commissioners under-stood that behavioural remedies only, such as maintaining the current licensing terms with small and medium pay-TV opera-tors, would suffice for clearance, CADE’s Tribunal decision was taken by a 4-2 majority vote for the divestiture of Fox Sports assets in Brazil. In CADE’s view: (i) the merger would create, in practice, a duopoly in the sportscast market; (ii) there are high entry barriers; and (iii) it is unlikely that the broadcasting rights of major leagues/championships will change hands. Disney and Fox entered into an agreement and undertook: (i) to divest Fox Sports channels to an effective competitor other than Globo

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appeal against CADE’s General Superintendence’s approval of the transaction. In 2020, during the review of the Boeing/Embraer merger case, CADE’s Tribunal ruled, by a majority of votes, that the Federal Public Prosecutor’s Office is not enti-tled to appeal to CADE’s Tribunal against CADE’s General Superintendence’s decisions.

Further, at the level of CADE’s Tribunal, if any omission, ambiguity, contradiction or material error exists in CADE’s Tribunal’s decision, the parties and/or interested third parties may file a motion for clarification within five days. The Federal Constitution allows the parties to seek judicial review of deci-sions rendered by administrative authorities, such as CADE.

5.10 What is the time limit for any appeal?

As mentioned, clearance by CADE’s General Superintendence may be appealed within 15 days, and a motion for clarification may be filed within five days.

5.11 Is there a time limit for enforcement of merger control legislation?

Under the 2011 Competition Act, CADE is entitled, within one year from the corresponding completion date, to request notifi-cation of transactions not falling under the turnover thresholds. The purpose is to allow CADE to assess a potential competi-tion harm resulting from a transaction involving players that do not meet the turnover thresholds, for example, but which could generate significant concentration in the relevant markets involved and an injury to competition.

6 Miscellaneous

6.1 To what extent does the merger authority in your jurisdiction liaise with those in other jurisdictions?

CADE frequently interacts and coordinates with competition authorities in other jurisdictions during the review of complex merger cases with international reach. CADE’s officials usually ask the parties for a waiver to exchange confidential information with other authorities and thus improve the level of information and remedies to be imposed on or negotiated with the parties.

6.2 What is the recent enforcement record of the merger control regime in your jurisdiction?

From January to October 2020, CADE analysed 327 mergers. Unconditional clearance was issued for 309 mergers, while four had their clearance conditioned to the execution of an ACC. One case was shelved for becoming moot, and 13 did not meet CADE’s thresholds (i.e., CADE decided not to exert jurisdic-tion). Out of 327 mergers, only seven were examined by CADE’s Tribunal.

6.3 Are there any proposals for reform of the merger control regime in your jurisdiction?

CADE’s Tribunal set up a study group to analyse whether or not CADE’s Regulation No. 9/2014 should be modified so as to consider managers of investment funds as a part of the invest-ment fund’s economic group. By doing so, the turnovers of the managers and the companies in which the managers hold at least

transparent and for the shortest possible time, so as to maintain the effectiveness of the remedy in mitigating the competitive harm of the transaction.

CADE usually requires the parties to hire an independent trustee for this divestment process, which will be tasked with supervising the divestment process, providing CADE with timely information on compliance with the negotiated terms, thus increasing the effectiveness of the remedies.

In May 2020, CADE’s DEE published a report examining how remedies are imposed by CADE in merger reviews, based on the 36 mergers reviewed by CADE’s Tribunal from 2014 to 2019, where remedies were applied. According to such study, 53% of the 36 mergers were subject to remedies of only a behav-ioural nature, 22% were subject to structural remedies only, and 25% of the cases had a combination of both behavioural and structural remedies. Furthermore, the study showed that an upfront buyer was required in only 26% of the mergers reviewed, market tests were conducted only in 25% of the cases, and trus-tees have been increasingly required during the last three years of the six-year period in 69% of the cases. Finally, the study noted that the terms for the adoption of structural remedies are above those recommended by the 2018 Remedies Guidelines of three to six months, and that there is some fluctuation in rela-tion to the adoption of behavioural remedies, which are usually for five years.

5.6 Can the parties complete the merger before the remedies have been complied with?

CADE may authorise the parties to complete the merger before all remedies have been complied with. In the recent past, CADE has conditioned the closing of a merger on the identification of a buyer, which occurs after the approval of the deal by CADE (up front buyer clause). In the Disney/Fox transaction, CADE allowed the parties to close the deal before a buyer was found. As mentioned above, since it was impossible to find poten-tial buyers for the divested business with sufficient economic size to conduct it and become an effective rival in the pay-TV linear sports channel production and licensing market in Brazil, CADE had to change, in May 2020, its 2019 decision to approve a package of behavioural remedies.

5.7 How are any negotiated remedies enforced?

CADE’s Attorney-General is tasked with overseeing enforce-ment of the remedies. In the past few years, CADE has required the parties to hire an independent external auditor (trustee) to monitor compliance with remedies and report to CADE’s Attorney-General from time to time.

5.8 Will a clearance decision cover ancillary restrictions?

In some cases, CADE can ask the parties to make changes to non-compete, exclusivity or non-poach clauses when imposing restrictions.

5.9 Can a decision on merger clearance be appealed?

Interested third parties admitted during the review process by CADE’s General Superintendence may appeal against its merger clearance decision within 15 days from publication. In case of regulated markets, the respective regulatory agency may also

58 Brazil

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7.2 Have there been any changes to law, process or guidance in relation to digital mergers (or are any such changes being proposed or considered)?

There have not yet been any changes.

7.3 Have there been any cases that have highlighted the difficulties of dealing with digital mergers, and how have these been handled?

In June 2020, CADE’s General Superintendence launched an investigation two days after the launch of the WhatsApp Pay service in Brazil by Facebook and Cielo. WhatsApp Pay aims at allowing users to make payments and transfer money via the WhatsApp messaging app. In addition to opening the investi-gation, CADE’s General Superintendence ordered the suspen-sion of the collaboration in view of concerns of anticompeti-tive effects resulting from the partnership and fixed a daily fine in the amount of R$ 500,000 for noncompliance. In parallel, the Brazilian Central Bank issued a similar decision. The concerns raised by CADE’s General Superintendence were related to (i) the potential need to submit the transaction for CADE’s prior review, and (ii) the potential exclusionary effects that the exclusivity agreement could have towards other providers of payment methods that compete with Cielo. By the end of June 2020, CADE’s General Superintendence revoked the injunction, but continued the antitrust investigation. The Brazilian Central Bank issued, a few days after CADE’s General Superintendence’s decision, a note authorising the parties to run tests on WhatsApp Pay.

It is worth noting that, in 2017, in Naspers/Delivery Hero and Itaú/XP, CADE had already addressed a number of difficult issues involving the digital economy, such as the definition of relevant markets in multi-sided platforms and the assessment of market power, having considered that the increase or the reduc-tion in the incentives to innovate plays a huge role in the assess-ment of technology-intensive markets. CADE also showed on some occasions its concerns with incumbents making a series of acquisitions of innovating firms in their early stages of product development, as such acquisitions could have a deleterious effect on competition by eliminating future competitors and stifling technological progress.

20% of the capital stock or voting capital would be included in the calculation of the jurisdictional thresholds. CADE’s concern is related to managers that hold great autonomy and decision-making power over the investment fund’s strategies and portfolio, effectively controlling it, unlike the dynamic usually verified in other investment funds. Under the current regulation, the investment funds’ economic groups should only comprise: (i) shareholders that directly or indirectly hold at least 50% of the fund’s shares; and (ii) companies in which the fund had at least 20% of the capital stock or voting capital.

6.4 Please identify the date as at which your answers are up to date.

Our answers are up to date as of 20 October 2020.

7 Is Merger Control Fit for Digital Services and Products?

7.1 Is there or has there been debate in your jurisdiction on the suitability of current merger control tools to address digital mergers?

Yes. CADE has promoted and/or has participated in several debates in 2019/2020 regarding the enforcement of the 2011 Competition Act in the digital economy. In August 2020, CADE’s DEE published a document entitled “Competition in digital markets: a review of specialized reports”, which summa-rises the findings of 21 studies published by other competi-tion authorities and research centres around the world on this subject. In 2019, CADE made a public statement to the effect that “the respective legal framework leaves enough room to adapt the existing concepts and tools, so that the current toolkit has been suitable to analyze the cases involving digital markets”. However, it seems now that the debate on the suitability of the current merger control tools is an important part of CADE’s agenda and some changes might be sought/implemented.

59Pinheiro Neto Advogados

Merger Control 2021

Leonardo Rocha e Silva has been a partner at Pinheiro Neto Advogados since 2006. He has more than 20 years’ experience in defending clients’ interests before CADE and the Brazilian courts. Leonardo constantly guides his clients through merger control issues and investi-gations, including cartels, vertical restraints and abuse of dominance. His practice areas include antitrust, civil and commercial litigation, especially litigation before the Brazilian higher courts. Leonardo previously worked in Switzerland and in the UK, and holds an LL.M. in International Economic Law from the University of Warwick.

Pinheiro Neto AdvogadosSAFS, Quadra 2, Bloco BEdifício Via Office – 3° andarBrasília-DF Brazil

Tel: +55 61 3312 9488Email: lrochaesilva@pn.com.brURL: www.pinheironeto.com

José Rubens Battazza Iasbech has been a member of Pinheiro Neto Advogados’ competition law practice group since 2009 and has signif-icant experience representing clients in complex antitrust matters, including merger review cases and investigations, comprising cartels, vertical restraints and abuse of dominance, negotiation of settlement agreements with CADE, court litigation and general antitrust coun-selling. His practice areas also include civil and commercial litigation. José Rubens holds a PgD Diploma in Civil Procedural Law from the Instituto Brasiliense de Direito Público (IDP) and another PgD Diploma in EU Competition Law from King’s College London. José Rubens is currently undertaking a Master’s Programme in Law at IDP.

Pinheiro Neto AdvogadosSAFS, Quadra 2, Bloco BEdifício Via Office – 3° andarBrasília-DF Brazil

Tel: +55 61 3312 9445Email: jiasbech@pn.com.brURL: www.pinheironeto.com

Pinheiro Neto Advogados’ Competition Law Practice Group has had in-depth knowledge of merger control rules in Brazil since the 1990s and is involved in some of the most challenging cases, helping foreign and Brazilian clients from various industries in successfully clearing their complex deals, adopting innovative solutions. Pinheiro Neto’s team has been able not only to represent clients before CADE’s proceedings, but also to help clients to define the best strategies for the deals. Pinheiro Neto has equity partners and complete teams of associates with expertise in competition law not only in São Paulo but also in Brasília, where the author-ities conduct the investigations and judgments. The team members have published various articles in the field, and have been constantly recognised by Who’s Who, Chambers and Partners, Best Lawyers, The Legal 500, LACCA Approved and other institutions as leading practitioners in Brazil.

www.pinheironeto.com

© Published and reproduced with kind permission by Global Legal Group Ltd, London

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