CADE orders dealerships to report acquisition

On 21 February, the Administrative Council for Economic Defense (CADE) reviewed the merger involving the firms CMJ Comércio de Veículos and Grupo Dahruj. The Tribunal determined that transactions involving the firms CMJ/Mais Distribuidora, Dahruj Motors/Service, CMD/Tempo, CMJ/Auguri (São Paulo), CMJ/Auguri (Guarulhos), and CMJ/Auguri must be notified to the authority within 30 days. A daily fine of BRL 10 thousand is to be applied in case of non-compliance.  

In July 2020, CADE launched an administrative procedure to investigate the acquisition agreement, based on a report by Grupo Dahruj involved in another investigation stating that there were 10 transactions in the last five years. The Office of the Superintendent-General removed two transactions from the review. In the CDMD/Automec and CMD/Andreta cases, it was verified that both transactions had been formally notified. However, six other mergers had not, although they fit the criteria for mandatory notification. 

The firms claim that the subject matter of the cases CMD/Tempo, CMJ/Auguri (São Paulo), CMJ/Auguri (Guarulhos), and CMJ/Auguri (Osasco) is to be considered moot since the firms Auguri and Tempo have ceased trading. 

Commissioner Gustavo Augusto, the rapporteur of the case, stated that the argument that the matter has become moot due to the cease trading is not sustainable: "If the fact that one of the parties involved in a transaction closed down the business after the consummation is considered a plausible justification for waiving notification, one would have to conclude that any takeover of a competing company for subsequent dissolution would be dismissed from being notified."  

The Tribunal of CADEagreed with Mr. Augusto’s statement and unanimously decided for a mandatory notification. The establishment of a financial penalty is suspended until the decision on the merits of the acquisition becomes final.