The Administrative Council for Economic Defense (CADE) recently published the Resolution No. 24, with changes to the administrative proceeding to investigate potential gun jumping cases, especially regarding the criteria for fine calculation.
Gun jumping occurs when the parties take actions to implement transactions before CADE's approval. Once the wrongdoing is detected, the companies involved are subject to a fine from BRL 60,000.00 (sixty thousand reais) to BRL 60,000,000.00 (sixty million reais). CADE may also declare the transaction null and void, and launch an administrative proceeding to investigate potential anticompetitive conduct.
The new methodology establishes a minimum fine of BRL 60,000.00 (sixty thousand reais), which shall be increased according to the transaction value, the turnover of the economic groups involved, the intention of the parties, the antitrust impacts of the deal and the period between the closing and CADE's decision. Spontaneous submission may be considered as a mitigating factor.
The new resolution intends to give more predictability to this kind of procedure. Its actual impacts and effects will be perceived when CADE's Tribunal rules on new cases.
Transactions of CADE's interest
Law No. 12,529/2011 (the Brazilian Antitrust Law) allows CADE to request the submission of transactions that do not fulfill the mandatory notification thresholds within one year as of their implementation. The new resolution also foresees that CADE will launch a proceeding and may request the parties to submit this kind of transaction for merger control review.
CADE has been signalizing that this proceeding will be increasingly used, especially in relation to regional transactions that may result in high overlaps, and mergers and acquisitions involving the technology and innovation sector.
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