2018 Vol. 1, Issue 1


Release date:2018-04-27
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Fernando M. Furlan*

ABSTRACT: The article analyses the merger review systems of Brazil, Chile and Mexico and their latest changes and developments. 

Brazil with it’s new Competition law made a radical change in M&A review with an ex-ante system. Chile finally implemented a mandatory merger review system and Mexico undertook significant changes in it’s institutional framework, including the creation of specialized courts on Competition and Telecom.

KEYWORDS: Mergers & Acquisitions; Competition; Antitrust; Latin America

I. Introduction

According to Global Competition Review,1Latin America has three competition authorities listed for enforcement rating: Brazil, Chile and Mexico. Brazil has four stars (up to five), and its competition enforcement is considered very good. Chile and Mexico have both three star ratings and their competition enforcement is due good. Each of the three countries have done a remarkable job in building competition awareness, contemporary legislation, functional systems and solid institutions.

Brazil changed its Competition Law in 2011 and adopted a more contemporary and efficient review and investigation system. The country shifted from a 3-agency structure to a single one (CADE), maintaining a Government department in charge of advocacy (SEAE) at the Ministry of Finance. All competition decisions are subject to judicial review by a first level federal judge.

Chile has chosen a voluntary M&A notification system and has developed a solid, efficient and specialized competition judicial review structure.

Mexico has also faced important modifications to its competition system recently and the Federal Competition Commission is now a solid institution in Mexico’s economy.

Before proceeding so, it is important to remember that other South American jurisdictions have made tremendous advances in building their competition regimes and institutions. According to Peña,2the development of competition law in Latin America can be divided into three stages:

(i)A preliminary stage, when a few countries in the region had some basic and vague legislation with poor enforcement;

(ii)A second stage, when most Latin American countries either modernized their existing competition laws or introduced modern ones with the guidance of international organizations; and A stage of consolidation of the existing regimes, with the introduction of substantial amendments to laws based on experience and on the ideas taken from the best practices agreed at the international fora, with significant debates and strong political support from their governments. We will briefly analyze the Chilean and the Mexican competition laws and policy and then turn to a more detailed analysis for Brazil in the context of these comments.


The current Chilean Competition Act does not provide for a specific merger regime. Mergers and acquisitions are assessed under the general provision of anti-competitive behavior contained in the Competition Act. Notification of mergers and acquisitions is, in principle, voluntary, but the Chilean Antitrust Court (Tribunal de Defensa de la Libre Competencia, ‘TDLC’) is competent to analyze an operation of concentration prior to its implementation as well as post-implementation, a procedure that can be initiated by the parties, the Chilean Competition Agency (Fiscalía Nacional Económica, ‘FNE’) and/or a third party presenting sufficient interest.

The FNE has also issued guidelines on the analysis of horizontal operations of concentration (the ‘Merger Guidelines’). These guidelines, which are not binding on the TDLC or the merging parties, indicate, in general terms, the criteria and methodology used by the FNE when analyzing the potential effects of a horizontal merger. A legislative proposal to amend the Chilean Competition Act was discussed3 in the Parliament and as a result of which a mandatory pre-merger notification regime was recently introduced. The final version, replacing the old voluntary system, has been approved by the Chilean Constitutional Court and signed by the President. 

The Chilean Competition Authority (the Fiscalía Nacional Económica or ‘FNE’) is in charge to carry on the new mandatory pre-merger notification merger control regime, which involves a two-stage investigation process with increased fines for breaches of the rules. The new regime also includes:

a)An obligation to suspend a transaction closing prior to clearance;

b)A two-phase review period of 30 business days (for initial review) and 90 business days (where an in-depth review is required); and

c)Fines for failure to notify / unauthorized completion of approximately US$15,000 or €13,300 per day. 

Two specialized Chilean competition authorities, the FNE and the TDLC, enforce the competition law. The FNE is the administrative body responsible for the investigation and prosecution of infringements of competition. It also provides technical support to the TDLC and supervises the compliance of decisions ruled by the TDLC. The FNE is an independent institution that functions under the responsibility of the Ministry of Economy and acts in the general interest of the public. 

In relation to mergers and acquisitions, the FNE can initiate an investigation to assess an operation’s compatibility with competition. Such an investigation may start ex officio upon a submission by the parties to the operation or upon a third party’s complaint. Depending on the results of the investigation, the FNE may close the case without further action, initiate a procedure before the TDLC or negotiate a settlement, which is subsequently submitted for approval to the TDLC through the fast-track procedure. The TDLC is an independent, specialized tribunal, with the status of a court that hears and decides competition cases in the first instance. As such, it is competent to decide on merger cases submitted by the parties themselves, the FNE or third parties in non-contentious procedures, as well as claims filed by the FNE or third parties, which are supposedly affected by an executed operation in contentious procedures. 

The TDLC is also authorized to approve or reject the result of negotiations between the merging parties and the FNE in the fast-track procedure. The TDLC is made up of five expert members comprising three lawyers and two economists. Decisions by the TDLC regarding operations of concentrations in non-contentious or contentious procedures are subject to appeal before the Supreme Court. Appeal is open to all parties that were part of, or had intervened in, the merger review process before the TDLC. The Supreme Court analyses both issues of fact and law; more specifically, it analyses whether the decisions made were well motivated and whether the remedies required by the TDLC to overcome the competition risks are proportional and adequate.


In principle, the notification of mergers and acquisitions is voluntary. However, the TDLC may analyze a merger prior to its implementation, as well as post-implementation, upon the request of the FNE and/or third parties with sufficient interest. The regime is therefore characterized as ‘semi-voluntary’.

Essentially, there are three procedural scenarios to be distinguished: (i) pre-merger consultation with the TDLC; (ii) pre-merger consultation with the FNE whereby the negotiated outcome may be submitted for approval by the TDLC in a fast-track procedure; or (iii) implement the operation concerned without consulting any of the authorities, thereby assuming the risk of a non-contentious or a contentious procedure (depending on whether or not the operation is materialized) initiated by the FNE or a third party.

Pre-merger consultation with the TDLC

Parties to an operation that potentially raises competition concerns may file a voluntary consultation to the TDLC. The FNE and third parties showing sufficient interest can also initiate a non-contentious procedure. The TDLC may approve the operation, approve the operation under conditions (remedies) or block the operation.

Pre-merger consultation with the FNE (fast-track procedure)

Parties to the merger can inform the FNE about an anticipated merger and, where there are potential competition risks according to the FNE, negotiate an extra-judicial agreement, which will normally concern mitigation measures to neutralize any such potential risk. An agreement which reflects a negotiated outcome is subsequently submitted to the TDLC for approval in a so-called fast-track procedure that may take between one and two months. Such a decision is not open to appeal to the Supreme Court.

Contentious procedure post-merger

A contentious procedure can be initiated post-merger by the FNE or any third parties with sufficient interest, provided that the operation was not assessed by the TDLC in a non-contentious procedure. The TDLC can order preventive measures and, by final decision, order the parties to terminate the operation, modify the operation and/or impose a fine up to approximately USD20 million.

In general, parties to a merger with effects in Chile do not consult with the TDLC, especially given the length of the procedure (a procedure before the TDLC may take up to eight months or more, with an additional four to six months in the case of an appeal to the Chilean Supreme Court) and the fact that there is no possibility to negotiate eventual remedies with the TDLC and/or Supreme Court (the parties can suggest or offer conditions or modifications, but it is the final decision of the courts that determines whether to accept the suggested remedies or whether to impose other remedies). Only in cases where the operation raises serious competition risks that need complex mitigation measures may the companies involved opt for a consultation pre-operation with the TDLC.

In other cases, companies generally choose to implement without consultation or – in a case where the operation raises certain competition issues that can, relatively, easily be remedied - to submit the operation to the FNE and negotiate the eventual mitigation measures.

An additional option, as a matter of good business practice and to reduce the risk that the FNE may initiate an investigation ex officio merely based on public information, is to approach the FNE informally regarding the envisaged transaction and the parties’ legal and economic reasoning as to why the transaction does not raise competition issues and/or the eventual remedies to mitigate any potential risk.

Therefore, the decision whether to approach the TDLC or the FNE essentially depends on whether the operation concerned raises competition issues and whether it is likely that the FNE will start an investigation ex officio or a third party will file a complaint with the FNE and/or initiate a non-contentious or contentious procedure with the TDLC.

Failing to Notify

There are no penalties for failing to notify, as notification is voluntary under the current and transitional system. Until the Fiscalía does not present the necessary detail regulation on thresholds for notification, failure to notify entails the risk that the operation is challenged ex-post by the FNE and/or a third party in a contentious procedure, requiring a fine and the unwinding or modification of the transaction. 

Fines are, in principle, made public. The FNE initiated one such procedure regarding the acquisition of a chain of movie theatres, requesting, in addition to divestitures, a sanction of approximately USD1 million to each party. The case was subsequently settled and no fine was imposed.4

Types of Transactions

The Competition Act does not provide for a definition of the type of transactions which may be subject to a merger review. The TDLC and the FNE generally refer to ‘operations of concentrations’ or ‘concentrations’, a concept, which is interpreted rather broadly.

The TDLC defines operations of concentration as acts or agreements, through which an independent entity merges or acquires decisive influence in the management of another independent entity, or as a result of which two or more of such entities jointly participate in a business or establish a joint venture, thereby reducing the independence between them in a significant and structural manner.

The FNE’s Merger Guidelines identifies the following as operations of concentration or concentrations: mergers, acquisitions of shares or assets, associations and, in general, acts or agreements with the objective or effect that two or more economically independent entities form one single entity taking common decisions, or become part of one and the same group of companies. The Guidelines state that the relevant issue is the change of competitive incentives, which is an economic concept, and that subsequently the principles of merger analysis also apply to agreements between competitors that decrease the level of autonomy or modify the form in which competitive decisions are made and, as such, produce effects on the market structure that are similar to a concentration.

In general, mergers, acquisitions of controlling interests and joint ventures are regarded as operations of concentration. Restructurings or reorganizations within a company or a group of companies are unlikely to qualify as operations of concentration, although there are no formal precedents on this issue.

‘Control’ is not defined in the Competition Act. In relation to issues of decisive interest or control, the authorities generally rely on the definition of ‘controlling interest’ provided for in the Securities Market Law. Securities Market Law defines the controller of a company as any person or group of persons with a joint action agreement that, directly or through other individuals or legal entities, participates in the ownership and has the power to:

(i)Ensure the majority of votes in the shareholders' meetings and elect the majority of the directors and to appoint the administrator; or

(ii)Decisively influence the management of the company. A 'decisive influence' in the management of a company is defined as the ability to control at least 25% of the voting capital of the company. However, if the following exceptions apply, the management will not be considered to hold a decisive influence:

a.Another person, or group of persons, controls an equal or larger percentage of the voting capital of the company;

b.The management does not control more than 40% of the voting capital of the company and that the controlled percentage is lower than the sum of the holdings of the other partners or shareholders with more than 5% of the equity; or

c.When the Chilean Securities and Insurance Supervisor so determines in consideration of the distribution and dispersion of the ownership of the company.

Resolution 667, issued by the national economic prosecutor (FNE), established that a transaction must be notified when the two following conditions are met:

✔ The sum of sales in Chile of the agents subject to a concentration operation are equal to or exceed UF1.8 million (approximately $70 million), during the last fiscal year (calendar year) in which the notification is verified; and

✔ The sales in Chile of at least two of the agents subject to a concentration operation are, separately, equal to or exceed UF290,000 (approximately $11 million), during their last fiscal year in which the notification is verified.

Foreign-to-foreign transactions may be subject to review where the operation influences any market in Chile. Effects on the Chilean market are less likely if the target has no sales in the jurisdiction. Both the TDLC and the FNE explicitly mention joint ventures as an example of operations of concentration5 that may be subject to merger control review. No distinction is made between types of joint ventures.

Although there are very few precedents on joint ventures, it can be assumed that the decisive element is whether a joint venture causes a structural change to the competitive behavior of previously economically independent companies. The FNE stated in an expert opinion given to the TDLC (regarding a joint-venture operation between the two largest electricity producers in Chile to construct a large hydroelectric power plant in Chile) that joint ventures should be assessed as concentrations rather than as horizontal agreements where the effects are structural in nature. 

It referred, thereby, to the doctrine in the US and the European Union on joint ventures operations. The TDLC approved the operation, adopting a methodology like that used by the European Commission when assessing ‘full-function’ joint ventures with possible coordinative effects between the parent companies.

Powers to Investigate a Transaction

The TDLC can review any merger post-implementation upon the request of the FNE and/or a third party, provided that the operation was not submitted and cleared in a non-contentious procedure prior to implementation. The statute of limitation for filing a claim post-operation is not entirely clear, but is likely to be three years from the time at which the operation was implemented.

Deadlines for Notification

There are no set timelines for voluntary submissions of projected mergers. The parties are therefore free to choose the moment of filing. Filing at an early stage carries the risk that the TDLC may hold the operation to be insufficiently concrete and/or that the parties are unable to provide all the information required by the TDLC when filing. Expected future regulation on thresholds will define time frames.

A formal binding agreement is not required prior to notification. The TDLC requires the parties to submit a document that describes the operation and that shows the intention to complete the operation is ‘real’ and ‘serious’. A Letter of Intent or Memorandum of Understanding will generally meet this criterion. Currently, the Chilean system does not provide for filing fees. In the case of a voluntary consultation to the TDLC, any of the parties in the operation can file. The common practice is that all parties file together, providing the information requested by the TDLC Future regulation on merger notifications will entail guidelines on probable fees.

Penalties for Incomplete Notification

Submitting insufficient information to the TDLC, such as market share and commercial policies, on the assumption that the tribunal will request the additional information it deems necessary to assess the operation, runs the risk that the TDLC may reject the requested authorization to perform the operation. 

Phases of the Review Process

A non-contentious procedure with the TDLC provides for one phase. After filing, the TDLC invites interested parties to provide information. Any parties with a legitimate interest, can join the procedure. All parties to the procedure are given the opportunity to submit additional arguments and information (such as expert reports). FNE will issue a report regarding the compatibility of the operation with the Competition Act. The TDLC subsequently calls for a public hearing. There are no set timelines for these stages after publication of the submission by the TDLC.6

The fast-track procedure is generally shorter. The FNE’s Merger Guidelines provide for a term of 60 days between the submission of the information and the agreement, but the term may be extended by agreement between the parties. The 60-day term will start running once the parties allow the FNE to make the transaction public. The agreement is reviewed in a single hearing within five days of the receipt of the information (which may be extended if the TDLC requests additional information). 

The TDLC will take its decision – either an approval or rejection of the agreement – within 15 working days of the hearing. Although the timelines are rather strict, the procedure generally takes between one and two months from the submission of the agreement. The fast-track procedure has certain shortcomings. The TDLC’s decision is binding on the parties to the agreement only and, theoretically, third parties can challenge the transaction post-implementation before the TDLC. More importantly, third parties can frustrate the procedure by challenging the operation before the agreement is submitted to the TDLC. There is no possibility for pre-notification discussions with the TDLC or its support staff. The parties may engage in discussion with the FNE, either prior to a voluntary submission to the TDLC or to discuss the possibility of the fast-track procedure. The FNE generally welcomes these discussions in a pre-submission stage.

Accelerated Procedure for Review

As indicated above, the Competition Act provides for a fast-track procedure whereby the parties notify to the FNE and, if necessary, negotiate a settlement, which is accordingly submitted to the TDLC for approval. The TDLC is not bound by the recommendation that has been accepted by the party or parties to the operation.

Substantive Test

The substantive test applied by the TDLC and the FNE is to establish whether the market power of the merged entity will increase, and, as a result of which, the risk of abuse of such market power or the risk of coordinated practices eventually increases. Chilean authorities apply a rather broad definition of market power and often focus on the effects on the market dynamics and market structure rather than on the actual risk of abuse or collusion post-operation or the causal link between the operation and that risk. 

This test is closer to the test for substantial lessening of competition than to an ‘abuse test’. Indeed, the FNE has informally stated that the substantive test is designed as a risk-effect test, like the substantial lessening of competition test, rather than as a structural test such as the dominance test.

The anti-competitive risks analyzed by the authorities are unilateral effects and coordinated effects, in addition to potential foreclosure effects resulting from vertical integration. Under the unilateral effects analysis, the authorities assess whether the loss of competition between the parties in the operation enables the merged group to exercise market power and increase prices. Co-ordinated effects are assessed where the market structure is such that companies would consider it possible, economically rational and, therefore, preferable to adopt a course of action aimed at selling at increased prices on a sustainable basis.

For TDLC it is irrelevant whether the possible co-ordination is explicit or tacit. It is also not necessary that the companies in the coordinating group adopt any of these conducts, it is sufficient that they have the ability and incentive to do so, which puts the competitive market structure at risk.

So far, there have been no decisions regarding pure conglomerate mergers, product extension mergers or operations that may eliminate a potential competitor. It is most likely that the authorities will consider conglomerate effects and elimination of potential competition if the issues are raised by future cases. 

In Falabella/D&S,7 the TDLC’s most controversial merger decision regarding the proposed merger between two of the main Chilean retail companies that would combine the main operator of department stores with the largest supermarket chain in Chile, the TDLC adopted a concept of ‘integrated retail’, which considered the market strength derived from the integration of complementary activities.

The FNE has provided guidance on its assessment method in its 2012 Horizontal Merger Guidelines, indicating in general terms the fundamentals, principles and methodology used in the case of an investigation into a concentration conducted by the FNE or in the case of a request for an opinion by the TDLC. The method and the factors taken into consideration are comparable to those used by other competition authorities in, for example, Europe and the USA. Chilean authorities do, moreover, use international precedents and doctrine for guidance.

Prohibition of Transactions

In the case of a review in a non-contentious procedure, initiated by the merging parties or by the FNE and/or third parties showing sufficient interest, the TDLC can clear the operation (by declaring that the operation does not violate the Competition Act), clear the operation subject to conditions, or prohibit the operation. In the case of a review in a contentious procedure ex post, the TDLC can decide that the operation qualifies as a violation of the Competition Act and order the unwinding or modification of the transaction. In the fast-track procedure, the TDLC can either reject or approve the extra-judicial agreement signed by the parties or between the party and the FNE.

The TDLC must thereby state the facts, law and economic basis on which its decision is based. The competition risks should be sufficiently real, imminent, severe, serious and likely. According to the Supreme Court, findings on coordinated risks require a higher standard of proof than findings on unilateral effects and should be supported by ‘concrete evidence in clear and precise form’.

The TDLC has prohibited an operation on two occasions (Falabella/D&S and Quiñenco/Terpel Chile8), although the Supreme Court overruled the latter decision approving the deal under conditions.

Negotiation of Remedies

None of the merger review procedures provides for the possibility to negotiate remedies with the TDLC. The parties can propose remedies when voluntarily filing a transaction or during a procedure. The TDLC will consider these proposals but is free to impose any conditions of operation on any remedies' package that it deems necessary.

There are certain possibilities for negotiating remedies with the FNE. Prior to or during a non-contentious procedure before the TDLC initiated by a voluntary filing, the parties may discuss the issue of remedies with the FNE. 

The merging party or parties may also settle a contentious case initiated by the FNE, whereby the settlement is likely to be related to commitments that the party or parties accept to mitigate potential competition concerns. However, the recommendations and settlements are not binding on the TDLC. Negotiations on remedies are more effective in the fast-track procedure. The TDLC can either approve the negotiated outcome or reject it. However, it lacks the authority to modify the agreement reached.

Standard Approach for Divestitures and Other Remedies

There are no guidelines regarding best practices for divestitures or other remedies. Recent decisions by the TDLC and opinions issued by the FNE provide guidance as to the authorities’ position towards conditions and timing, and demonstrate that their practice regarding divestitures is moving towards the best practices developed by the European Commission and the US Department of Justice.

Completion prior to materialization of a divestiture has been allowed, with transitional measures and conditions imposed, to secure the value and competitiveness of the business to be divested and to avoid co-ordination during the divestiture period, e.g. an administrative hold separate. The TDLC may, in certain cases, find that divestitures are to be carried out by means of auction, but on other occasions the parties may be left free to negotiate with potential buyers.

Conditions in respect of the potential buyer relate to issues such as sufficient financial recourse, experience and independence from the merged group. Until now, the TDLC and FNE have not conditioned the divestiture on prior approval of the buyer, although in certain cases involving concentrated markets and where the selected purchaser business was an existing competitor, the TDLC set, as a condition, that the divestiture was to be notified to the court for prior review. 

Divestiture periods range from six to eighteen months depending on the complexity of the sale, whether the operation will be implemented pending divestiture and whether the sale is part of a wider global package. These periods may be extended upon a reasoned request from the party or parties concerned.

The FNE will monitor and supervise the compliance with the measures adopted. In recent cases, the authorities have insisted in the appointment of a monitoring trustee to facilitate the FNE’s task.

Appeals and Judicial Review

Decisions by the TDLC regarding mergers are subject to appeal before the Supreme Court. Appeal is, in principle, open to all parties that were part of, or intervened in, the merger review process before the TDLC. 

Partial Conclusions

Chile has just approved and regulated its mandatory merger notification system after decades of voluntary submissions. It is a great challenge for Chile’s Competition Institutions, such as the FNE and the TDLC, as they launch brand new merger investigation procedures. Thresholds and timing are deemed fair for the countries’ economic idiosyncrasies. 


Article 10 of the Mexican Federal Economic Competition Law provides that the Federal Economic Competition Commission (‘FECC’) is an autonomous entity with its own legal personality and patrimony, independent in its decisions and operation, professional in its performance and impartial in its actions. Its purpose is to guarantee free market access and economic competition, as well as to prevent, investigate and combat monopolies, monopolistic practices, concentrations and other restrictions to the efficient functioning of the markets. Mexico’s President signed a bill in 2014 formalizing the implementation of important amendments to the Mexican Constitution that primarily cover telecommunications, media and antitrust.

The New Antitrust Law aims to restore the structure of the antitrust regulator and update Mexican antitrust regulations by adopting OECD practices and standards, as well as tracking and satisfying the mandates of the constitutional amendments. The new law: (i) creates two regulators with broad new powers; (ii) implements a new regulatory regime for general antitrust matters; (iii) implements a special framework for antitrust matters related to telecommunications and media; and (iv) creates specialized courts to resolve antitrust and concentration matters.


The two regulators are:

  • New Federal Economic Competition Commission (‘FECC’) that oversees all matters except telecom and media; and 

  • Federal Telecommunications Institute (successor to the Federal Telecommunications Commission) that oversees all matters related to telecom and media.

FECC is vested with broader authority and powers to eliminate barriers to competition, mandate divestiture of assets and issue regulations and opinions. It has broader power to investigate and determine the absence of effective competition, the existence of barriers to competition and free access or essential resources (covering inputs and facilities) that may generate anticompetitive effects in a market, and the FECC’s authority to resolve the same, even ex ante, by imposing corrective structural or behavioral interim measures, including the determination of access conditions and prices.

Except in those cases where the FECC orders the divestiture or sale of assets, rights or equity interests, the implementation of the FECC’s resolutions are not subject to a judicial stay pending the outcome of litigation.  Preventive measures may be imposed, but may be suspended if the economic agent provides adequate guarantees.

An Investigation Unit within FECC is created to conduct antitrust (anticompetitive practices and concentrations) inquiries and related analyses. If the unit concludes that there is a case to be pursued, then it can open an administrative process in which it will act as the prosecutor, the alleged violators will be defendants, and the FECC will preside over and decide the case.


Concentrations that meet the thresholds set forth in Article 86 of the Economic Competition Law must be authorized by the Commission before they are carried out:

I.When the act or series of acts that give rise to them, regardless of their celebration, imported into the national territory, directly or indirectly, more than the equivalent amount eighteen million times the general minimum daily wage for the Federal District;

II.When the act or series of acts that give rise to them, involve the accumulation of thirty five percent or more of the assets or shares of an operator, whose annual sales originating in the country or assets in the country importing more than equivalent to eighteen million times the minimum daily wage for the Federal District, or

III.When the act or series of acts that give rise to them involve an accumulation in the national territory of capital assets or exceeds the equivalent of eight million four thousand times the general minimum daily wage for the Federal District and concentration involving two or more operators with annual sales originating in the country or assets jointly or separately owned in the country, importing more than forty-eight million times the daily general minimum wage in force for the Federal District.

The most relevant changes brought by the amendment are:

a.The parties may not close a transaction until FECC clears it (closing after lapse of the ten-day period without the issuance of a stop order, permitted under the existing Economic Competition Law, is no longer allowed);

b.FECC is permitted to seek information from third parties and government agencies;

c.The parties forming part of the concentration may propose conditions (related to future structure or administration of the concentrated assets to address the adverse effects of the proposed market concentration) in order to secure the approval of the concentration prior to the FECC ruling; and

d.FECC clearance will be effective for six months, extendable for one additional six-month period


Penalties (administrative and criminal) and fines have been strengthened, such as the divestiture of assets, regulation of essential resources and barring of individuals from participating as agents, officers or members of the board of directors because of their direct or indirect participation in illegal antitrust or market concentration practices.  Administrative fines go up to 10% of a violator’s revenue, in addition to civil and criminal liabilities exposure.

Partial Conclusions

Mexico has undertaken a national effort in the last years to modernize the country’s legislation, bureaucracy and practices toward increasing legal certainty and creating a business friendlier environment. That resulted in important amendments to the Constitution and in significant changes in Competition policy and enforcement.


Competition effective enforcement in Brazil is relatively young as the country’s economy opened to free trade and free market less than three decades ago. Despite its youth, competition enforcement in Brazil has grown soundly, especially in the last decade or so, with new and successful investigative tools such as the leniency program, authorized dawn raids and wire-tapping. Competition decision-making in Brazil has shown maturity also by sanctioning state-owned giants, long-standing cartels and huge and aggressive quasi-monopolists with record fines and other penalties9.

CADE is struggling since 2002 to confirm its prerogatives in the banking and financial sectors against a Government decision10 dated 2001 that deemed the Central Bank of Brazil, the financial and banking regulator, as responsible for scrutinizing conducts and reviewing transactions. 

Competition enforcement in Brazil went through a deep change in 2001-12, as the merger review system shifted from a post-merger to a pre-merger one, bringing many challenges to the country’s competition authorities as we point below.

We will briefly review the historical background of the creation of a Competition Law and Policy in Brazil, as well as the current institutions and specific legislation dealing with conducts and mergers and acquisitions. In addition, we will analyze the new competition legislation for Brazil, effective since 29 May 2012, with important changes in relation to the unification of institutions, new merger review mechanism, new criteria for submission of transactions and new criteria for imposing fines and other sanctions.

Historical background

The history of competition law and policy in Brazil dates from 1962, when CADE - the Administrative Council for Economic Defense - was created through Law n. 4.137 as a consulting Government commission with powers only to present recommendations to the Executive branch as at that time the State controlled prices in most sectors, and many of the country’s largest enterprises were either state owned or publicly sanctioned private monopolies.

Law n. 8.884/94 transformed CADE into an independent administrative tribunal with extensive new powers. Its decisions became final and appealable only to the judicial courts. The promulgation of the new competition law in Brazil followed major economic changes brought by the 1988 Constitution and the ‘Real Plan’ that created a new currency and implemented strict fiscal policies, as well as re-opened the economy through the elimination of international trade barriers and launched a broad privatization process.

All these economic adjustments carried intensive and progressive in-flow of foreign capital into the country what, among other reasons, culminated with many operations of mergers and acquisitions.

The Brazilian Constitution provides unequivocal basis for competition policy.  Article 173, paragraph 4 provides that ‘[t]he law shall repress the abuse of economic power that aims at the dominance of markets, the elimination of competition, and the arbitrary increase of profits.’ 

Article 170 ponders also that the ‘economic order’ shall be ‘based on the appreciation of the value of human labor and on free enterprise’. It establishes that some principles must be respected, including ‘free competition’, ‘consumer protection’, ‘private property’ and ‘social role of property.’ 

The New 2011 Brazilian Competition Law

On 30 November 2011, Law n. 12.529 was enacted restructuring the Brazilian Competition Policy System (BCPS). By its provisions, the current Administrative Council for Economic Defense (CADE) is composed of two main bodies: one decision-making - the Competition Tribunal - and the other an instruction and recommendation one - the Superintendence - in place to the Secretariat of Economic Law (SDE). In addition to these structural changes, the new law redefines the functions of the Secretariat of Economic Monitoring of the Ministry of Finance (SEAE), focusing on the activities of ‘competition advocacy’, including within the public sector. The ‘new CADE’ and SEAE will form then the new BCPS.

New Pre-Merger Analysis System

One of the main changes brought by the new law was the introduction of the pre-merger analysis system, in line with what most world leading antitrust Jurisdictions already do. Beforehand, transactions had to be notified to competition authorities up to 15 business days after its consummation (binding agreement).

The new pre-merger system avoids legal uncertainty and transactional costs associated with any decision by CADE to disinvest in a scenario where subsequent acts to the transaction were already accomplished and implemented. It is natural that after a while, companies involved in a merger or acquisition seek economic advantage of synergies, making a separation of operationally complex business processes and routines. Intuitively, it is also more difficult to reverse a merger or acquisition ever undertaken than to prevent that it initially exists, that is, when it is just a set of intentions and understandings.

Agility, Legal Certainty and Economic Timing

Non-Complex merger cases are initially scrutinized by CADE’s General Superintendence, which may approve them without consulting the Tribunal, except for the possibility of a call-back of the case by any member of the Tribunal.  If there is no call-back, the tribunal will only be triggered when the Superintendent concludes that the operation generates or may generate harm to competition, and, therefore, requires some State intervention, situation in which the case will be sent to the Tribunal for final decision. 

Another significant change introduced by the new law is related to the role of the Federal Prosecutor’s Office. Under the new system, the Federal Prosecutor’s Office opinion on merger and acquisition cases will no longer be mandatory. That, however, does not preclude its general participation in line with its institutional functions and prerogatives, including the protection of diffuse interests of society.

Another important innovation was the creation of the Department of Economic Studies of CADE, serving both the Superintendence and the Tribunal. This legal innovation responds to the growing sophistication of antitrust economic analysis, often permeated by complex econometric opinions and studies.

The new law also strengthens the independence and autonomy of the members of the Tribunal and the Superintendent. The terms of the President and Board members of the Tribunal are extended from 2 to 4 years, removing the possibility of renewal. Board members’ (or commissioners) terms will be unmatched to allow substitutions to occur to preserve as much institutional integrity as possible. The Superintendent, in turn, will have a renewable 2-year-term.

New Criteria for Notification of Mergers and Acquisitions

Another relevant change that intends to offer more flexibility in the analysis of mergers and acquisitions concerns the amendment of the criteria for notification of transactions to reduce the amount of transactions submitted to CADE. Current parameters have led to an excessive number of notifications with little competitive impact. Past law provided that operations in which any of the participants has shown revenues exceeding BRL 400 million (US$ 115 million) in Brazil, or that result in a concentration equal to or greater than 20 per cent of the relevant market should be submitted.

Under the new legislation, the criterion of market share is removed and introduced an ‘additional criteria’ on revenue through which the second (or other) parties of the operation will have to present revenue of at least BRL 75million (US$ 21 million) in Brazil, besides un upgraded main party BRL 750 million (US$ 215 million) revenue criterion. That is, in current reality, any operation performed by a large economic agent, albeit in conjunction with other(s) small economic agent(s), should be compulsorily notified to CADE for review.

With the new law criteria, operations without any impact on the market will no longer be notified, saving public and private resources and time. Regarding new revenue criteria, it is to be highlighted that an important provision establishes a safeguard to CADE, which within one year from the date of consummation of a transaction, may require the submission of operations that do not fit the revenue criteria described generically by the law. 


Competition policy in Latin America has evolved extraordinarily in the last decades. The three Latin American Jurisdictions we briefly analyzed here have done noteworthy works in building competition consciousness, up-to-date legislations, well-designed systems and recognized institutions.

It is important to remind that other Latin American Jurisdictions, even though not listed at GCR Review, have made tremendous advances in building their competition regimes and institutions. 

Chile has finally adopted a mandatory merger notification and review system11 ,as its Economy is becoming more complex and concentrating. This is a very significant change in the Chilean Competition model and is expected to bring more control and supervising powers to this increasing sophisticated South American economy. 

Mexico approved a new bill formalizing the implementation of important amendments to the Mexican Constitution aiming at modernizing its Economy, bureaucracy and institutions. Those changes primarily covered telecommunications, media and antitrust and are already in effect. The new two regulators, the Federal Economic Competition Commission and the Federal Telecommunications Institute, have broad and new powers. They must also implement a new regulatory regime for general antitrust and related to telecommunications and media, as well as create specialized courts to resolve competition matters. That will allow Mexico to deliver important results on sound competition enforcement and advocacy activities.

Brazil has just celebrated 5 years of a renewed institutional framework, with a bigger and more powerful CADE and the awaited pre-merger notification system, both through the promulgation of Law 12.529/11 (New Competition Law). With such changes, Brazil could get rid of its M&A backlog and put a bigger portion of its taskforce with the focus on anticompetitive practices, as bid rigging.

Beyond legislative changes, it is crucial that Brazilian competition enforcers and business community accompany the spirit and fundamentals of this new legislative approach. Examples and experiences from other Jurisdictions were very helpful as a constructive, open and respectful dialogue between enforcers and business representatives, as well as clear and extensive guidelines. The transition period from old legislation and practice to the new system was crucial to its success. Challenges include continuous focus on investigation and scrutiny of massive conduct cases.12

Comparing the late advances of the three Jurisdictions, one may conclude that regarding specialized judicial review of competition cases, Brazil is still far behind its two South American neighbors. Even though Brazil has just initiated a process of specializing its federal judges on matters such as competition, regulation and trade.13

The Brazilian and Chilean developments on merger review system deserve praise for they were long wished for, each one for its reasons: Brazil for a pre-merger system instead of a post-merger one; and Chile for a mandatory merger notification system.

Finally, Mexico’s example shows how the country could put together a national effort to modernize its institutions and legislation toward a friendlier approach to business and investment.


Cade’s Administrative Proceeding N. 08012.009888/2003-70. Industrial and Medicine

Gases Companies Cartel. Date of Decision: 1 September 2010. Available at: http://www.cade.gov.br/Default.aspx?40e032c64fc459ab44d5230759

Commission of European Communities.  White Paper on damages actions for breach of Community rules in the antitrust field. Available at:

http://ec.europa.eu/comm/competition/antitrust/actionsdamages/files_white_paper/citizen_pt.pdfp. 4-5

Competition Law and Policy in Brazil - A peer review. Inter-American Development Bank and Organization for Economic Co-operation and Development. 2005. Accessible at: http://www.oecd.org/dataoecd/12/45/35445196.pdf

Connor John e Helmers Gustav. ‘Statistics on Modern Private International Cartels, 1990–2005’. Working Paper No. 07-01 do ‘American Antitrust Institute’. Accessible at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=944039#PaperDownload. Apud MATION, Gisela Ferreira. ‘As Ações Civis para Cessação e Reparação de Danos Causados por Condutas Anticoncorrenciais no Brasil’. III Prêmio SEAE/2008. Available at http://www.seae.fazenda.gov.br/conheca_seae/premio-seae/iii-premio-seae/estudantes-de-graduacao

Crane Daniel A. ‘Private Enforcement against International Cartels in Latin America: a U.S. Perspective’ (April, 2008). Cardozo Legal Studies Research Paper N. 231. Available at: http://ssrn.com/abstract=1120069

Furlan Fernando de M. Especialização Judicial. Ed. Singular, São Paulo, 2017.

Mation Gisela Ferreira. ‘As Ações Civis para Cessação e Reparação deDanos Causados por Condutas Anticoncorrenciais no Brasil’. III Prêmio SEAE/2008. Available at http://www.seae.fazenda.gov.br/conheca_seae/premio-seae/iii-premio-seae/estudantes-de-graduacao

Nehme Ferrada. At: http://www.chambersandpartners.com/guide/practice-guides/location/272/8474/2412-2000. Accessed on 12 October 2016

Pace Lorenzo et al. Dizionario Sistematico Del Diritto Della Concorrenza, Jovene Editore, 2013. Naples, Italy. Available at: http://www.competition-law.eu/wp-content/uploads/2014/04/Dizionario-completo.pdf

Parecer AGU GM – 020, of 5 April 2001. Available at: http://www.agu.gov.br/sistemas/site/PaginasInternas/NormasInternas/AtoDetalhado.aspx?idAto=8413

Pena Julian. The Consolidation of Competition Law in Latin America. Competition Policy International (PCI) Journal. Accessible at: https://www.competitionpolicyinternational.com/the-consolidation-of-competition-law-in-latin-america/.

Roso Jayme Vita. ‘Novos Apontamentos à Lei Antitruste Brasileira’. (LTr. São Paulo: 1998).

* Fernando M. Furlan is PhD professor of Economic Law and Applied Economics at FACIPLAC Law School and e-learning instructor for the Brazilian Supreme Court - STF. He independently consults and arbitrates on Competition, Trade, Regulation, Corporate and Compliance matters and is member of the Dispute Settlement Body of MERCOSUR, of the Advisory Group of Experts on Competition of UNCTAD and Non-Government Advisor to the International Competition Network - ICN. He was Deputy Minister of State for Development, Industry and Foreign Trade of Brazil (2015-16) and, under such capacity, he chaired the Advisory Boards of BNDES and BNDESPAR. He was previously special advisor to the Ministerial Chamber of Foreign Trade of Brazil – CAMEX (2015). He was President of CADE, the Brazilian Competition Authority (2011-12), as well as Competition Commissioner (2008-11) and CADE General Counsel (2001-03). Mr. Furlan worked for Sadia S/A (now Brasil Foods) and was a foreign attorney at U.S. and European law firms between (1996-97). He received his PhD and Master degrees from the University of Paris I – Panthéon-Sorbonne. He was a full-time post-doctoral research fellow at the Faculty of Law of the University of Macau, China (2012) and visiting scholar at the American University Washington College of Law (2017). He obtained his law degree from the University of Brasilia – UnB (1993) and his business administration degree from the University of Santa Catarina – UDESC (1991).

1 Global Competition Review: rating enforcement 2015.

2 Pena Julian. The Consolidation of Competition Law in Latin America. Competition Policy International (PCI) Journal. Accessible at: https://www.competitionpolicyinternational.com/the-consolidation-of-competition-law-in-latin-america/.

3 Nehme Ferrada. At: http://www.chambersandpartners.com/guide/practice-guides/location/272/8474/2412-200. Accessed on 12 October 2016.

4 On 27 June 2012, the FNE filed a complaint before the Competition Tribunal (TDLC) to challenge the acquisition by Chile Films S.A. (‘Chile Films’) of the Hoyts cinema chain, which was the second player in the market. Prior to the transaction, Chile Films only owned Cinemundo, the third largest cinema chain in Chile. With the deal, Chile Films has become the leading player in the market. This was a landmark case in Chile’s competition law, since it was the first time that the FNE filed a complaint to challenge a closed merger. In its complaint, the FNE concluded that the relevant product market involved in the challenged merger was the exhibition of first-run commercial movies in multiplex movie theaters. Regarding the relevant geographical market, the FNE considered the areas in which the merger produced a significant overlap and – according to international standards – used a radio of 6 kilometers to assess the actual and potential effects of the transaction. The FNE concluded that the merger produced anticompetitive concerns in 3 zones of the capital Santiago and in the whole city of Valparaiso. The FNE requested the TDLC to impose fines of a total of US$ 2 million against the buyers, due to their dominant position in the market and the fact that they knew and foresaw that the merger would create actual or potential anticompetitive effects. Despite such circumstance, the buyers did not decide to file a consultation before the TDLC in advance of closing, neither asked the FNE to review the transaction. In addition, the FNE requested the TDLC to issue a divestiture order concerning the 3 areas (2 in the capital Santiago and 1 in Valparaiso) in which the merger produced the most serious anticompetitive concerns.

5 Joint ventures are, in fact, operations of cooperation, not concentration.

6 According to TDLC statistics, the average duration of non-contentious procedures (which includes both merger cases and other competition cases) is around eight months.

7 Resolution No. 24 – Case NC 199-07.

8 Resolution No. 39 – Case NC 399-11.

9 Petrobrás S.A. case (Administrative Process No. 08700.002600/2014-30), Oxygen and Cement Cartel cases (Administrative Processes No. 08012.009888/2003-70 and 08012.011142/2006-79, respectively), AB Inbev (Ambev) case (Administrative Process No. 08012.010028/2009-74).

10 Parecer AGU GM – 020, of 5 April 2001. Available at: http://www.agu.gov.br/sistemas/site/PaginasInternas/NormasInternas/AtoDetalhado.aspx?idAto=8413

11 Nehme Ferrada. At: http://www.chambersandpartners.com/guide/practice-guides/location/272/8474/2412-200. Accessed on 12 October 2016.

12 Lava Jato Cartel case; São Paulo City Metropolitan Transport System Cartel case; Brasilia Region Fuel Cartel case, among many others.

13 Furlan Fernando de M. Especialização Judicial. Ed. Singular, São Paulo, 2017.