Cade concludes agreement with companies that practiced gun jumping

Sep 10, 2020


On September 09, CADE’s Tribunal concluded yet another gun jumping investigation – denomination given for the consummation of an operation without prior approval of the authority through the ratification of a Merger Control Agreement (“Agreement” or “ACC”, its acronym in Portuguese) with the companies represented by Hidracor and Arco-Íris Tintas. Under the terms of the Agreement, the companies recognized the illicit act, provided in article 88, §3 of Law No. 12,529/2011, and they will pay a pecuniary contribution of R$ 193,000.00.

The operation consisted of the acquisition  of assets for the manufacturing and marketing of decorative paints and hydrated lime from the brand Hipercor in 2019, held by the companies Arco-Íris and Midol, by Hidracor, up until that time. Cade received the operation by voluntarily submission on January 16, 2020 and approved it by the fast track without restrictions , which is applicable to simple cases with low potential offense to competition. Simultaneously to the analysis of the merger, CADE established administrative procedures to determine if the transaction was consummated without prior authorization from the authority.

During the case’s trial, Reporting Commissioner Maurício Oscar Bandeira Maia concluded that the transaction was effectively notified late, since it occurred prior to its submission to CADE in 2020. Arco-Íris and Hidracor verbally agreed to the assignment of assets and brands in January 2019, and they entered into a definitive purchase and sale agreement in July 2019. To conclude the investigation, the companies proposed an Agreement, in which they recognized the practice of gun jumping and assumed a pecuniary contribution fixed at R$ 193,000.00, which was accepted by CADE’s Tribunal.

Despite the good faith demonstrated by the parties in voluntarily notifying CADE of the merger, proposing an Agreement, and the minimal competitive impact of the operation approved by the fast track, the amount of the contribution was over three times higher than the base fine of R$ 60,000.00, which was established in Resolution no. 24/2019 to discipline the procedures of verification for gun jumping. This was the second case evaluated under the new Resolution.