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CADE Guidelines Regulate Antitrust Concerns in International Mergers

Posted on the 14 June 2013 by Angelicolaw @AngelicoLaw

With the steady increase in corporate globalization, governing bodies across the world are making important decisions about how to handle international corporate mergers. The goal of these efforts is to ease antitrust concerns relating to unfair competition as large companies move into new markets as a result of mergers.

On May 22, 2013, Brazil’s Tribunal of the Administrative Council for Economic Defense (CADE) approved two Merger Control Agreements (ACC) under the new competition regulation that went into effect in May 2012. The new antitrust regulation, Law 12.529/11, governs complex international mergers that affect competition in Brazil.

The CADE Approves the First Two Merger Agreements

The first approved ACC relates to the merger between Syniverse and MACH, two data clearing houses that provide outsourced services to mobile telecommunication companies relating to roaming charges. The second permitted ACC relates to the merger of Scandinavian paper manufacturers Munksjö and Ahlstrom, providers of pre-impregnated decorative paper used for indoor furniture and heavy abrasive paper used to polish materials in many industrial sectors.

CADE’s decisions mark the first time the agency has taken action on complex mergers that raise significant competitive concerns since it began requiring companies to receive antitrust clearance before closing their transactions.

According to CADE’s president, Vinicius Marques de Carvalho, the cases reflect the advances brought by Law 12.529/11. “In the previous law, the Council would only analyze cases after their approval in other jurisdictions. With the institution of the analysis prior to the merger, we are able to discuss possible remedies in a coordinated manner with similar agencies abroad.”

Regarding the Syniverse and MACH merger, CADE’s general superintendence concluded that the transaction would result in high concentration in the mobile data clearing and roaming markets. According to CADE, to remedy competition concerns, the parties agreed to obligations to “remove any anticompetitive harms of the transaction.” The specific terms of the agreement are confidential.

The Importance of International Antitrust Cooperation

The two mergers also raise international antitrust concerns beyond the Brazilian market. The terms of the merger agreements are now being reviewed in other jurisdictions, including the European Union. In order for the CADE to achieve its objectives, cooperation between international agencies that govern competition is crucial.

“This case demonstrates the importance of fomenting dialogue between Competition authorities in an increasingly globalized world. It is worth highlighting the interaction between Cade and the European Commission to exchange information and synchronize stages of the investigation,” said the Reporting Commissioner.

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