CADE signs agreements with firms for completing deals before clearance

On 27 September, the Administrative Council for Economic Defense (CADE) fined companies BRL 5.5 million for completing three acquisitions — commonly known as gun jumping — without CADE’s clearance.

The first case is the acquisition of equity participation from SBM Offshore by HAL Investments. The Office of the Superintendent General identified the conduct from the information submitted during the transaction, filled in December 2021.

The firm clarified that the transaction was carried out in February 2020 and HAL had exercised control over the shares before receiving clearance from CADE. The firm only notified the authority in April 2020.  Hence, CADE launched an administrative procedure to investigate the acquisition for gun jumping.

HAL was fined BRL 2.3 million for the violation, as established in the signed agreement.

The second case relates to the controlling interest of J&F Participações, which belonged to JJMB and WWMB, by José Batista Junior. The transaction was conducted in June 2016, but CADE only became aware of the conduct through the review of another case of acquisition of controlling interest of J&F Participações, in 2021.

The merger was terminated approximately one year after it was completed in 2017. However, the parties involved had to submit the transaction for approval by CADE at the time. For this reason, the firms involved submitted an agreement committing to pay a financial contribution of BRL 2.3 million.

The third case investigated the acquisition and transfer of assets and commercial properties of car dealerships by Amazonas Leste Group before CADE's clearance, in the last years. The investigation followed a complaint sent to the agency.

In January 2015, Studio Veículos e Peças (a company member of the Amazonas Group) acquired the rights and assets of Ford dealership, previously held by CMD Motors in the East Zone of São Paulo, before CADE granted clearance. CADE only reviewed the case in 2021. The firms are to pay a financial contribution of BRL 855 thousand, as established in the agreement.

Mandatory reporting

Under the provisions of Law 12529/2011, mergers and acquisitions must be notified to CADE if at least one of the parties involved in the transaction had a gross turnover or a total volume of business in Brazil of equal to or over BRL 750 million, and of equal to or over BRL 75 million, for at least one more party involved in the year preceding the transaction.

Transactions that fit this income criterion must not be completed until the Tribunal renders its final decision.

Access the cases:

Administrative procedure to investigate mergers and acquisitions no.08700.007096/2021-94.

Administrative procedure to investigate mergers and acquisitions no.08700.003972/2019-99.

Administrative procedure to investigate mergers and acquisitions no.08700.000977/2020-01.