Brazil: When Does A Foreign-To-Foreign Transaction Trigger A Brazilian Antitrust Notification?

Last Updated: 15 April 2019
Article by Vivian Fraga and João P.S. Almeida Da Costa

Certain international transactions still leave parties wondering whether Brazilian approval is required

The (not so new) Brazilian Antitrust Law[1] is currently marching towards its eighth year anniversary, and it is well recognized that Brazil has done a great job in promoting a "competition culture" within the M&A practice. The introduction of the bar-on-closing regime has played a great part in that, and has led the Brazilian merger control to unimaginable quality levels[2], similar to those in the mainstream antitrust jurisdictions.

This means that undertakings in Brazil are paying close attention to antitrust matters at very early stages of M&A negotiations.

  • Issues can arise in the due diligence process, particularly with respect to sharing competitively sensitive information;
  • Antitrust-related deal points that can be addressed in the merger agreement itself, particularly where the deal carries antitrust risk;
  • The very drafting of the merger agreement clauses that could entail premature integration of the undertakings before antitrust approval, and result in significant fines;[3],[4]
  • The production of documents and the submission of accurate information as part of the filing;
  • The proper conduct of the undertakings after the deal has been signed, but before regulatory approval and closing.

The success of Brazilian merger control also means that in international transactions the Brazilian business community truly recognizes the need to carry out a thorough legal assessment of whether a transaction needs to be notified in Brazil to the Administrative Council for Economic Defense (CADE).

The general double-turnover rule triggering a mandatory notification to CADE is already well known: transactions involving one economic group that registered over BRL 750 million and another economic group that registered over BRL 75 million, both of them in Brazil, in the previous fiscal year[5] require a notification to CADE.

However, certain uncertainty still hovers around the legal need to notify CADE of transactions taking place outside Brazil that would have – even if in theory - no effects in this country, although both undertakings would fulfill the general double-turnover rule. Would CADE wish to review a transaction taking place strictly overseas, not affecting Brazil in any way, solely due to the undertakings reaching the double-turnover threshold?

The Brazilian Antitrust Law itself provides for some guidance on how to answer this question, as it only applies "to practices performed, in full or in part, in the national territory, or that produce or may produce effects thereon"[6].

The possible conclusion is that CADE will evocate its jurisdiction whenever effects in Brazil (including potential effects) have been demonstrated ("Effects Theory"[7]). A "local effects test" would follow, and this would be the main aspect in an assessment of whether a foreign transaction should be notified to CADE.

The simple part of identifying effects in Brazil involves situations in which the target entity holds assets or subsidiaries in the national territory, or has registered turnover in Brazil – even if solely through exports, and regardless of their amount.

However, the real issue is that the Brazilian Antitrust Law does not have explicit rules for the application of this test; how to proceed when effects are only potential; or if exceptions and de minimis exemption apply. How, then, would one be able to determine whether a foreign transaction should be notified to Brazil?

For transactions taking place entirely outside Brazil (foreign-to-foreign) or in which joint ventures are created outside Brazil in order to develop products or businesses that will not be offered to Brazil, the analysis of potential effects is related to the market affected by the transaction. The main question is: can this transaction somehow have effects in the Brazilian territory? One should note that answering to this preliminary question is not an assessment of anticompetitive effects – as the latter is actually part of the assessment of the merits of the case. The preliminary question is rather of where the transaction will produce its effects – i.e. where the business involved will be active.

CADE has had the opportunity of analyzing cases in which it indicated situations it should exert its extraterritorial jurisdiction. The cases we have identified[8] allow a few key factors on whether foreign transactions should be notified in Brazil. Especially:

  • Are the products, businesses or services involved sold, or have been sold (or offered) in Brazil?
  • Would a hypothetical relevant market definition be international?
  • Are they merger agreement provisions stating that Brazil is / will be a target territory?
  • Do imported products supply the national market?

A transaction resulting in a negative response to most of the questions above probably would not pass the effects test in Brazil, and would have a reasonable chance of having CADE deciding that its jurisdiction would not apply, and notification is not mandatory. However, the absence of an official guidance from the authority means that a thorough assessment by specialized antitrust counsel is still a requirement in each case.

International Experience

In the United States, the Hart-Scott-Rodino Act (HSR)[9] exempts acquisitions of foreign assets from mandatory notification in case these foreign assets have generated less than USD 84.4 million sales in or to the United States in the previous fiscal year. Thus, in contrast to Brazilian regulations – which adopted an "Theory of Any and All Effects" (any effects could trigger a notification, even if very limited or potential), the United States have in place a "Minimum Effects Theory" of sorts. This is a somewhat more evolved discipline as it sets forth that the antitrust authority does not wish to perform an antitrust assessment of foreign transactions whose assets have not reached a certain level of sales in or to the United States.

Still within the context of merger review, the European Commission – under the terms of Council Regulation (EC) no. 139/2004 – EC Merger Regulation – establishes that EC jurisdiction shall apply to all community-dimension transactions according to quantitative parameters set forth in the regulation. These are based on the undertakings' business volume. There are exceptions exempting some transactions from notification, such as non-"full-function" joint ventures, which are applicable to transactions in general and could be used to justify non-notification of a transaction whose undertakings reached the turnover threshold in the European Union.

Furthermore, a great portion of competition literature and case law[10] defends that effects should necessarily be foreseeable, immediate and substantial, i.e., there must be a real and effective probability of effects.

Meanwhile, the lack in the Brazilian competition legislation of provisions expressly requiring that effects of a certain transaction are concrete and/or reach a certain level of revenues means that Brazil's standing is more extensive than the positions adopted in the United States and the European Union. In our communications with specialized antitrust counsels in these jurisdictions, we notice that transactions of the type that would require a notification to CADE would be often exempt from notification to competition agencies in those jurisdictions.

Even if CADE's case law deserves recognition by having evolved significantly, further predictability based on objective criteria – that does not involve solely the double-turnover rule – is welcome.

Since the Brazilian Antitrust Law did not provide a precise definition for, or attempted to restrict the meaning of "effects", doubts still arise on whether certain international transactions would trigger a notification to CADE.

While the Brazilian antitrust community eagerly awaits for an opportunity for CADE to tackle this issue deeply and publish express guidance or regulation on the matter, an in-depth specialized assessment is still a requirement in each case.


[1] Law no. 12529/2011, dated November 30, 2011.

[2] Since the current law came into force in 2012, CADE has consistently analyzed around (or over) 400 merger reviews a year, with average review times that are also consistently low. For instance, in 2018, CADE analyzed 404 mergers averaging 27.4 days per review.

[3] The Brazilian Antitrust Law heavily punishes premature implementation (gun-jumping) of a transaction before CADE's approval, if such approval is mandatory. Fines may range from BRL 60,000 – 60,000,000 (USD 16,200 – 16,200,000 as of February 2019)

[4] According to CADE's Gun-Jumping Guidelines, the premature implementation of a transaction can happen even through the exchange of sensitive information between the companies, or any act that could be interpreted as meaning one party is exerting influence over the other before CADE's clearance. 

[5] BRL 202 million and 20,2 million, respectively, as of February 2019.

[6] "Art. 2. This Law applies, without prejudice to the conventions and treaties of which Brazil is a signatory, to practices performed, in full or in part, on the national territory, or that produce or may produce effects thereon."

[7] According to this doctrine, one country's competition laws would be applicable to foreign companies and even to domestic companies operating outside Brazil whenever their behavior or transactions taking place outside Brazil produce "effects" in or over the national territory. This Effects Theory thus covers undertakings regardless of their location or nationality.

[8] (i) Merger Review no. 08700.007305/2018-02 (DENSO Corporation and Aisin Seiki Co., Ltd)., among others in which TozziniFreire acted as counsel for the undertakings; (ii) Merger Review no. 08700.000692/2018-48 (Applicants: ExxonMobil Chemical Gulf Coast Investments LLC and SABIC US Projects LLC); (iii) Merger Review no. 08700.006037/2016-31 (Knorr-Bremse Commercial Vehicle Systems Japan Ltd. and Bosch Corporation), and others. For further reference, IBRAC, Merger Control in Brazil:  Frequently Asked Questions, 2018. Beyond The Turnover Thresholds: How Does the Local Effects Test Function in the Context of Merger Control. Vivian Fraga, Patrícia Bandouk Carvalho and Natan Maximiano Munhoz.

[9] The Hart-Scott-Rodino Act disciplines, at a federal level, the suspensory merger review procedures. On this specific subject, see sections §802.50 and §802.51 of the Hart-Scott-Rodino Act. Available at Accessed on January 31, 2019.

[10] The effects issue has been a topic for discussion for quite some time within the international antitrust community. Since 2005, the Organization for Economic Co-operation and Development (OECD) recommends that antitrust authorities exercise their jurisdiction only over transactions that hold appropriate nexus within that jurisdiction's territory. See the Recommendation of the OECD Council on Merger Review. Available at Accessed on February 4, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions