BMA Barbosa Mussnich Aragao
BMA has been present in most of the major M&A transactions in Brazil over the last two decades, participating in the creation of corporate groups that do business around the world in sectors such as retail, food and beverages, logistics and transportation, telecommunications, petrochemicals, steel and metals, banking and finance, real estate and construction, technology and education.Show more
Company & Commercial
It is hardly surprising that Brazil's adoption of the International Financial Reporting Standards did not mesh perfectly with the Corporations Law. This article discusses the reasons for this incongruity, including that the international accounting model draws more inspiration from common law systems than from Brazil's civil law tradition and the temporal distance between the Corporations Law (although it remains modern in spirit) and the accounting rules, which are constantly evolving.
Competition & Antitrust
State-owned oil and gas company Petrobras recently reached two settlements with the Administrative Council for Economic Defence to close five investigations into alleged abuses of dominance in the oil refining and domestic natural gas markets. The settlements have drawn significant attention, as they constitute the first time that divestment commitments have been adopted as a remedy in a dominance case.
The Administrative Council for Economic Defence recently issued a decision on the definition of 'de facto control' under Brazilian competition law. While the decision establishes certain criteria that companies should consider when determining whether their contractual relationships with close partners may confer de facto control, these criteria are somewhat unclear and do not allow companies to assess, with sufficient certainty, whether an agreement should be subject to mandatory review.
The Administrative Council for Economic Defence (CADE) tribunal recently fined Unilever R29.4 million for abusing its dominant position in the impulse ice cream (ie, ice cream for immediate consumption) market. According to CADE, Unilever had violated competition law by adopting different types of agreement with its points of sale, which had resulted in their de facto exclusivity to sell Unilever ice creams under the brand Kibon.
The Administrative Council for Economic Defence (CADE) recently requested, for the second time, the compulsory notification of a transaction that did not meet the legal turnover thresholds. This right allows the authority to review the business strategies of successive small acquisitions or acquisitions of nascent rivals in the event that they do not trigger the turnover thresholds. The risk that the CADE may require notification seems to increase following complaints by competitors or third parties.
In recent years, Brazil's antitrust authority – the Administrative Council for Economic Defence (CADE) – has undergone a reshuffling in terms of the composition of both the Administrative Tribunal (comprising commissioners) and the General Superintendence. Among the issues that have come before the reshuffled CADE, two investigations are particularly notable because they reveal a new trend in its approach to IP rights.
Since the start of 2018, following a period in which it focused on the persecution of cartels, the Administrative Council for Economic Defence (CADE) has directed more resources towards concluding pending abuse of dominance matters and occasionally launching new dominance cases. In so doing, the most pertinent question has become: how will CADE deal with dominance in future?
The Administrative Council for Economic Defence (CADE) and the Central Bank recently entered into a memorandum of understanding. This initiative strengthens the relationship between the two authorities and promotes greater cooperation among them for the analysis of merger cases and anti-competitive practices by financial institutions. It also represents an important step forward, signalling the end to the longstanding dispute between CADE and the Central Bank over jurisdictional conflicts.
The Ministry of Finance recently issued Decree 9,299/2018, which partially changed the structure of the Brazilian Competition Policy System (BCPS). The BCPS undertakes three main activities: preventive control, repressive control and competition advocacy. The restructuring focuses on the promotion of competition advocacy in the country.
As in other jurisdictions, the Brazilian authorities have been striving to build a well-respected leniency programme. Evidence from recent years suggests that before allowing a company to benefit from its leniency programme, the Administrative Council for Economic Defence has become more demanding, requesting strong evidence of the existence of collusion, as well as proof of any (potential) impact in the country.
Under the former Brazilian merger control system, several non-classical M&A transactions were subject to merger review by the Administrative Council for Economic Defence. This broad statutory language left much room for uncertainty. With the introduction of the new law, the open-ended wording of the former law has been replaced by a list of reportable transactions.
Since the entry into force of the new Competition Law, practitioners, investors and the competition authority have spent much time discussing the review of transactions involving investment funds. Most issues in connection to these discussions arise as a result of the authority's regulation that sets forth a broad definition of 'group of companies' whenever investment funds are involved.
The year 2012 was key for the modernisation of antitrust law and policy in Brazil, with the new Competition Law finally entering into force. The new legal framework changed the dynamics of the antitrust review process – not only for the antitrust authority, which now has a new deadline to review merger cases, but also for companies, which must now deal with a ban on closing obligations during the merger review process.
Tech, Data, Telecoms & Media
The president recently approved, with a partial veto, the Project for a General Law regarding Data Protection. The law will regulate the processing of personal data in Brazil. Even though this adaptation may be costly and time consuming, the enforcement of the law is expected to guarantee greater protection of personal data, increasing confidence in Brazil's economic environment.