The Administrative Council for Economic Defense (Cade) launched in October of 2018 the Antitrust Remedy Guidelines. The Guidelines compile the best practices and procedures usually adopted by Cade in the design, application, and monitoring of remedies negotiated with parties to complex mergers. With the publication of the Guidelines, Cade aimed at giving greater predictability and transparency to the remedy negotiation process with parties involved in complex transactions that may not be subject to unconditional clearance.
Antitrust remedies may be structural, when they aim to maintain market structure (such as the sale of equity, independent business units, productive capacity, or intellectual property) or behavioral, when they limit the company's future conduct and generally require monitoring (such as restriction on access to sensitive information, supply obligation, sharing of efficiencies, etc.)
Since Law No. 12,299/2011 entered into force, 33 transactions reported to Cade were cleared with remedies. The agency accepted purely behavioral remedies in 16 of these cases, structural remedies in 10, and hybrid remedies in 7 of them. In the same period, 6 transactions were blocked by Cade, as the competition authority and the merging parties failed to reach a consensus on remedies deemed appropriate to neutralize the competition concerns associated with the transactions. Four of these rejections occurred in the short period between June of 2017 and March of 2018.
In this context of recurring complex transactions under the scrutiny of the competition authority, the publication of the Guidelines is most welcome.
A significant part of the Guidelines is intended to clarify the principles that contribute to the effectiveness of the remedies, which should be observed during the negotiation of an agreement on control of concentration (ACC for its acronym in Portuguese) in order to ensure that the remedies are quick to implement, feasible, monitorable, and proportionate to the competition problems identified.
It is worth highlighting that in the Guidelines Cade has expressed its preference for structural remedies, which ate more efficient and less burdensome than the behavioral remedies. It will be necessary to verify how this preference will be materialize, since the adoption of behavioral remedies by Cade under Law No. 12,299/2011 has been more common. The Guidelines also indicate Cade’s preference for the adoption of a monitoring trustee that will help it monitor and guarantee compliance with the obligations established in the remedies, thus hoping to increase their effectiveness.
The Guidelines detail practical issues relevant to structural remedies (e.g., divestment package, suitable buyer, and divestiture process) and behavioral remedies, as well as provide clarifications on trustees' roles, monitoring of ACCs, and applicable penalties for non-compliance , among other issues.
The Guidelines should streamline remedy negotiations with Cade, insofar as parties to transactions that may generate competition concerns will have concrete elements to discuss and assess in advance possible remedies to be proposed to the agency.