The new Brazilian Competition Law (Law No. 12,529/2011) was published on December 1 and will enter into force on May 29, 2012 (180 days counted from the date of its publication).

The most significant change brought by the new law is the introduction of a pre-merger control regime. The new law also lays out new filing thresholds, creating a sole two-prong turnover threshold; the market share threshold set forth in the current Brazilian merger control regime no longer exists under the new law.

The new law also promotes an institutional restructuring of the Brazilian antitrust authorities, which to date comprise three agencies: the Secretariat of Economic Monitoring of the Ministry of Finance (“SEAE”); the Secretariat of Economic Law of the Ministry of Justice (“SDE”); and the Administrative Council for Economic Defense (“CADE”). Under the new law, SDE and CADE will merge to create the new CADE, which becomes the sole agency in charge of both merger control and antitrust investigations. SEAE shall no longer be part of the review process of antitrust matters; its responsibility will be limited to competition advocacy.

The structure of the new CADE shall be as follows:

• The Administrative Tribunal for Economic Defense (“Tribunal”);

• The General Superintendence; and

• The Department of Economic Studies.

Below we summarize other significant changes brought about by the new Brazilian Competition Law:

• Penalties for gun jumping: the parties must remain independent from each other until they are able to obtain CADE’s approval to the transaction.  Fines for gun jumping may range from R$60,000 to R$60 million (approximately US$32,000 to US$32 million) and the parties may become exposed to a formal investigation into their behavior prior to obtaining antitrust approval;

• Filing thresholds:

• At least one of the groups involved in the transaction had gross revenues in Brazil of at least R$400 million (approximately US$220 million) in the preceding fiscal year; and 

• At least one of the other groups involved in the transaction had gross revenues in Brazil of at least R$30 million (approximately US$16 million) in the preceding fiscal year.

• Review period: CADE shall have up to 240 days to issue its final decision on the notified transaction.  This review period may be extended for an additional period of 60 days, if requested by the parties, or for an additional period of 90 days, by means of a justified order issued by the Tribunal. President Dilma has rejected the proposed provision which set that a given notified transaction would be automatically approved if the review period elapsed before CADE’s final decision.  We expect CADE to issue the necessary regulations foreseeing the consequences for not complying with the total review period established by the new law, as well as rules for expedite procedure and shorter review periods for simple transactions.

• Remedies: the notifying parties are allowed to negotiate remedies with CADE to expedite the process. CADE shall issue regulations setting forth the rules for remedy discussions within the following months.

Additionally, the new law introduces specific changes with respect to antitrust investigations.  The most important one is that the basis for the calculation of fines for antitrust infringements (including cartels) is now restricted to gross revenues generated in the line of business where the offense occurred.  The concept of "line of business" may be interpreted broadly, which leads to a high degree of uncertainty for defendants and therefore will require a careful look on a case-by-case basis.  The level of the fines, on the other hand, shall be reduced: 0.1%-20% for companies; and 1%-20% of the fine imposed on the company for directors and officers found guilty for the infringement.

We are at your disposal to provide you with any additional information on the above.