Brazil’s new antitrust regulatory body and approval process came into force yesterday, prompting a wave of deals sign before the deadline. About ten deals have been closed, such as Thomas Lee’s acquisition of Fogo de Chao, and bankers report some efforts are being made to close deals today in the hope they can avoid the new regime.
The key change is that in future deals including companies with operations in Brazil, (one party must have Brazilian revenues over R$400 million and the other over R$30 million) must achieve approval from the authorities before closing M&A. Previously deals could close and then would only be subject to regulatory clearance in special circumstances.
The previous three regulatory authorities are also being merged into one new body called Conselho Administrativo de Defesa Economica (CADE).
While the new system is not in itself bad news (both the EU and the US have similar suspensory regimes) the concern is about adding substantial delay to the new compulsory regulatory stage: CADE will have up to 240 days to make a decision, and this can be extended in various circumstances. There will also be no automatic clearance should the time period expire without a decision from CADE. Also, the new system will be operating under a new untested body and it is still unclear how CADE will operate, how it will interact with applicants and whether it can or will prioritise certain industries and / or deals of certain scale.
For more information read the June issue of Euromoney