The Administrative Council of Economic Defense (CADE) has recently published Resolution nº 13, of June 23, 2015, which regulates instances of mandatory merger notifications to CADE that were not communicated in due time and those that were not notified because, by law, they were not required to be. Mergers that were notified and consummated before CADE’s assessment and those that were not notified and consummated before being assessed are set forth in §3 of art. 88 of Law nº 12.529 of November 30, 2011, whereas mergers that were not notified because they legally did not have to be, but whose submission could be required by CADE are set out in §7 of the same article. Thus, Resolution nº 13 does not present any innovation, unless one considers that, (i) in the cases of §3, procedures were created for these actions and (ii) in the case of §7, besides the creation of procedures, it reinforces the fact that none of the mergers that have not been notified in due time, even if they did not have to be, are exempt from notification, that can become obligatory. First off, the term “to require”, included in the law and in the resolution, must be understood as “to determine”, especially because art. 14 of the Resolution establishes that “in the cases where CADE determines notification of the merger (…)”. Furthermore, having CADE “require” something would be incoherent, since this [requesting] is an action/verb befitting the parties and not the authority. The procedure set forth in the Resolution is called “administrative procedure for ascertainments related to mergers (APAC)”, in relation to which we will focus on provisions related to §7, since the cases stipulated in §3, constitute, in any event, conducts of disobedience to known rules, while in the case of the § 7, we have full compliance with the rules, followed however by a discretionary act from CADE’s. This act is discretionary because, as per the law (again, §7), it establishes a faculty for CADE, which can decide for the necessity or not of a merger’s notification. CADE’s request has a deadline of one year “from the corresponding date of consummation”. It should be noted that the initial term of the deadline does not have a legal definition. Verifying this inexistence, one can borrow the provision in article 2 of CADE Resolution nº 15, of August 10 1998: “The moment from when the transaction is deemed as realized (…) shall be established as the date of first binding document (…)”. There are, however, two serious risks in adopting this definition. The first risk is the fact that this definition has been persistently contested in Court; being that there are still cases in the Judiciary that can produce decisions annulling the regulatory (complimentary?) text. The second risk is the fact that the Resolution is outdated, planned for Law nº 8884, of June 11, 1994, in which the initial term for counting the deadline for merger notification to CADE was the moment of the contract’s consummation; nowadays, under Law n. 12529, of November 30, 2011, notification is prior and approval is a mandatory condition for the business’ consummation. The APAC shall be initiated by CADE’S General-Superintendence (SG), but despite an eventual decision by the SG to close the case, CADE’s Court can claim the case; and, if SG decides for the merger’s notification, even then the parties can appeal to CADE’s Court. Nevertheless, the most important aspect of this message is to remind all those who do not have to notify their mergers that CADE can oblige them to submit a notification and that the deadline of one year is reasonably fluid, since it depends on the transaction’s consummation. Nevertheless, it will be seen that CADE will face another problem, which is the return of a condition understood as finished. While under the previous legislation, with post-merger notification, many times CADE, although they wished to impose restraints to the transaction, would only be able to impose behavioral restrictions (called “remedies” in the specific jargon), since frequently structural restrictions (e.g.: sale of productive units) had already become impossible. Mauro Grinberg is a former Commissioner of the Brazilian Antitrust Agency, a former Attorney of the Treasury and is the senior partner at Grinberg e Cordovil, a competition and trade law boutique in São Paulo.
This article was published in Jota, website for information, August 4th, 2015.