New Brazilian antitrust authority allays fears of M&A delay

M&A activity has dropped in Brazil in the months after the introduction of the country’s new antitrust regulations and governing body.

The Conselho Administrativo de Defesa Econômica (Cade) came into force at the end of May. During the preceding three months, according to Dealogic, 428 M&A deals were announced. This total slumped to 190 in the three months after Cade came into effect.

However, much of this discrepancy can be attributed to a rush in deals closing before Cade began operations – boosting the deal tally for March to May. Bankers sought to avoid the regulatory risk of the new regime, which requires companies with operations in Brazil to seek regulatory approval for deals when one Brazilian organization has revenues of more than R$400 million and the other more than R$30 million.

Previously, deals could close and become subject to regulatory clearance only in special circumstances.

More worrying than this approval – which, after all, just places Brazilian antitrust regulation on to the same legal basis as in the US and Europe – was the fact Cade was itself beginning operations, having been created from the merger of three regulatory bodies.

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