CADE changes associative (collaborative) agreements notification rules

On October 18, 2016, the Administrative Council for Economic Defense (“CADE”) enacted Resolution No. 17, which revokes Resolution No. 10 and defines that associative/collaborative agreements with the following characteristics are subject to antitrust clearance: 

Term: 2 years or longer.

Object: joint  enterprise/undertaking for exploring a business activity.

Risks and results are shared between the parties

The parties are competitors in the relevant market object of the agreement. 

The parties must also meet the turnover thresholds set forth in the Brazilian antitrust law: (i) one of the economic groups must have a recorded gross turnover (gross sales revenues) above BRL 750 million, and (ii) another economic group must have a recorded gross turnover (gross sales revenues) above BRL 75 million.  

The main changes in relation to the previous resolution are:

Introduction of the concept of joint enterprise/undertaking for exploring a business activity, described as “the acquisition or offer of services or goods in the market, even without the pursuit of profit, as long as, in such case, the business activity could at least in theory be explored by a private company with the intent to obtain profit”.

Sharing of risks and results of the business activity, which brings the associative agreement’s concept closer to the idea of joint enterprise/undertaking.

Exclusion of the market share criteria.

Exclusion of agreements between vertically related players: agreements shall only be filed if the parties are competitors in the relevant market object of the contract, either directly or through other companies belonging to the same economic group. 

The resolution also sets forth that agreements with term inferior to 2 years or with indefinite term shall be filed when the 2 years mark is reached or surpassed. The filing shall be made before the renewal of the agreement. The effectiveness of the renewal will depend on CADE’s approval. 

The new Resolution will come into force on November 24, 2016.