Nearly five years after the entry of Law No. 12,529/2011 (Brazilian Antitrust Law) into force, the Administrative Council for Economic Defense (CADE) recently informed that it had ordered for the first time the submission of a merger that did not meet the legal criteria for mandatory filing.
This extraordinary measure was adopted in an international transaction with effects in Brazil, whereby Guerbet S.A. acquired the business of contrast for X-rays and computerized tomography and magnetic resonance from Mallinckrodt Group S.a.r.l. The deal, which closed on November 27, 2015, came to the attention of CADE by means of a complaint filed by GE Healthcare do Brasil Comércio e Serviços para Equipamentos Médico-Hospitalares Ltda. (GEHC), a competitor of the merging parties. According to GEHC, after the merger Guerbet S.A. would have a high market share that could facilitate price increase, changes in private and public players' cost structure, and ultimately affect consumers.
After the applicable administrative proceedings, CADE ordered the filing of the merger on August 27, 2016. The matter is currently being analyzed by CADE’s Superintendence-General, which so far has not ordered the adoption of any measure to ensure the possibility of undoing the merger if necessary.
CADE’s order is based on Article 88 (7) of the Antitrust Law, which allows the agency to determine the filing of any merger, regardless of whether the concentration requirement and the turnover threshold are met, within one year of the closing date. Strictly speaking, in extraordinary circumstances any M&A transaction might be subject to CADE’s scrutiny if it raises serious antitrust concerns.
The demonstration that CADE does intend to enforce the above-mentioned legal provision shows that it would be recommendable for parties to horizontal mergers or vertical mergers that could entail anticompetitive effects to assess the need to adopt cautions vis-à-vis the so-called CADE risk, even if the merger would not trigger a mandatory filing obligation in Brazil.