CADE breaks a record of reviewed mergers

In 2020, the Administrative Council for Economic Defense (CADE) broke a record of reviewed merger and acquisitions. The agency assessed 454 transactions, the greatest amount of cases reviewed per year since 2013, when CADE started to consider for review only M&As reported under the terms of Law 12529/2011 that restructured the Brazilian Competition Defense System.

The balance is part of CADE's Yearbook for 2020, a report to society of the outcomes achieved by the agency on promoting free competition and fighting economic crimes.

CADE's president Alexandre Barreto considers that the significative number of reviewed cases represents the effort of the antitrust agency in giving promptness to the proceedings, even in the context of a challenging year due to the pandemic. "In 2020 we had to reinvent ourselves and overcome the challenges imposed by the pandemic to continue meeting the needs of the market and keep a healthy competitive environment in Brazil. It is quite significant to note that, considering the atypical year, we have improved CADE's performance on merger reviews, which is a relevant aspect to the antitrust law," he stated.

One of CADE's duties in its competition defence is to assess the effects mergers and acquisitions between firms have on the market and society. According to Law 12529/2011, merger and acquisitions regard the consolidation of two or more firms that previously operated independently; the acquisition of the shares or part of the shares of one or more firms by other firms; the merger of one or more firms by others; or the signing of a partnership agreement, consortia or joint venture amongst two or more firms.

In recent years, the number of cases assessed by the agency has gradually increased:

2016 – 390;

2017 – 337;

2018 – 404;

2019 – 433;

2020 – 454.

Amongst the cases reviewed in the last year, 95% were unconditionally cleared (423 cases) and 1.5% were cleared subject to remedies (7 cases).

Transactions notified in 2020 exceed BRL 500 billion

Should be reported to CADE every merger or acquisition, in any economic sector, that one of the firms involved in the transaction has a total sales in Brazil of at least BRL 750 million in the year preceding the transaction and the other firm a total sales of BRL 75 million.

In 2020, 471 merger and acquisitions were reported to CADE. Summed, the transactions represent a total sales of BRL 501.7 billion. The main sectors that reported transactions were the sectors of electric energy generation, transmission and distribution; manufacture of allopathic medicines and for human use; real estate development; and human health care activities.