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News - 15 August 2012

Nearly three months after the new anti-trust legislation - known as the CADE Law (Administrative Council for Economic Defense) - came into force in Brazil, the market is calming down in relation to the changes in the rules for Mergers & Acquisitions. This is what Daniel Ávila Failla, lawyer at Dannemann Siemsen and specialist in Mergers & Acquisitions believes.

“There was indeed a certain rush by companies to approve their negotiations before the new regime, but the trend now is that the situation will calm down and return to a normal pace. At the moment we are witnessing a period of waiting and caution”, the specialist said.

At first, however, the analysis of cases shall take a little longer than before the new rules came into effect, due to the volume of mergers submitted to CADE before the new Law was enforced. “Some operations were analysed before the new Law, but companies are already aware that the process could take a little longer. There is one case in the office that is under analysis, but right now the process will probably be a little slow. We hope that, moving forward, the time periods will normalize”, explains Failla.

“The new law, in addition to providing a minimum turnover for companies involved that must submit their business for analysis (R$ 750 million and R$ 75 million) distinguishes two types of operations: the simple and the complex. The simple will have a speedier evaluation. The problem is that, for the time being, the concept of what differs a simple operation from a complex one does not yet have a clear criterion”, Failla points out.

CADE will also act more in the repression of acts detrimental to competition: “There have already been signs that CADE will concentrate its activities on investigations into anticompetitive practices. The regulatory body will start to work more actively to identify and punish these practices”, concludes Daniel Failla.

In time, it is likely that CADE and the market will adapt and the processes will return to a normal flow.