The approval of the Superintendence-General (SG) of Cade (Administrative Council for Economic Defence) is an important step for the parties to a merger filing to be able to close the deal, but it is not necessarily the last. This is because the Competition Law provides that, for 15 days after the publication of the SG's clearance decision in the Official Gazette, it may be challenged by means of appeals from interested third parties duly qualified in the proceeding or by a request from Cade’s Administrative Tribunal itself. For this reason, the parties must necessarily wait for this period to elapse before declaring the closing of the transaction, so as not to engage in a violation known as gun jumping.
Challenges by the tribunal were rare in the Brazilian experience. During approximately five years of the Competition Law, which instituted the pre-merger control regime, only three transactions had been called up for review by the tribunal. As of 2018, however, there has been a significant increase in the number of challenged cases: with 12 precedents in this direction today - three in 2020 alone -, the possibility of requests for review by Cade’s Administrative Tribunal can no longer be considered remote, especially in merger cases that are complex from a competition standpoint.
The vast majority of the challenged transactions to date involve merger filings reviewed under the non-fast track procedure, but transactions under the fast-track procedure may also be subject to being called up by the tribunal, which must take place at the request of one of Cade’s Commissioners in a reasoned dispatch, subject to ratification by CADE’s panel.
The order requesting the review of a merger case does not mean a ruling on the merits of the case, but only the existence of reasoned doubt as to whether the transaction can be approved. According to Cade’s case law, the tribunal’s justifications for challenging a merger case include: (i) a more careful review of the relevant markets affected, including markets rarely analyzed by Cade; (ii) discussions regarding the dismissal of transactions that may potentially affect competition; (iii) high market shares; (iv) inaccuracies in the data presented to the SG; and (v) facts supervening the SG's clearance.
When calling up a merger filing, the tribunal must decide whether to uphold the SG's decision for unconditional clearance, approve it with restrictions, or even block it. So far, the tribunal has upheld the SG's unconditional clearance decision in all cases called up for review, except for one that is still under analysis by Cade.
Companies should be aware that a merger filing may be reviewed by both bodies at Cade, which will entail a longer review period until the clearance decision, even going beyond the 30 days deadline for fast-track cases, and may postpone the date initially foreseen for closing the deal.