Bloomberg News

Brazil M&A Reporting Rules May Change to Appease Funds

September 16, 2012

Brazil’s antitrust authority may change merger reporting requirements for investment funds after complaints that the regulations, which took effect three months ago, are too sweeping.

“We are talking to capital-markets associations and lawyers in Brazil and abroad,” said Carlos Ragazzo, general superintendent of Cade, as the authority is known. The goal is to “bring to the board the possibility of change in the regulation for funds as a way to improve the legal procedure,” Ragazzo said in an interview.

The merger law, which Brazil President Dilma Rousseff signed late last year, requires buyers to seek antitrust approval before closing a deal. It forces funds to report acquisitions to Cade if annual revenue exceeds 750 million reais ($373 million) at either the fund’s shareholder, the fund- management company or other companies from the same sector in the fund’s portfolio or among the management company’s holdings.

Bruno Amaral, head of the merger-and-acquisition commission at Anbima, Brazil’s capital-markets association, said the group will provide any information Cade needs to “explain how the fund industry works and how we could simplify the rule to avoid a waste of time for companies, lawyers and also for Cade.” Amaral is a partner at Banco BTG Pactual SA, the fourth-largest Brazil merger adviser so far this year.

Old System

Under the new legislation, Cade said it will take no more than 330 days to review a proposed merger. Otherwise, it will be automatically approved. The new rules were intended to prevent mergers from taking place before antitrust regulators had a chance to review them. Previously, companies filed requests to review transactions after an accord had already been reached, allowing operations to be merged before final approval, which could take as long as two years.

Of the 41 cases submitted to Cade under the new law, the average time of approval was 19 days, Ragazzo said. Seventeen of the deals included funds, and those had an average approval time of 17 days, he said.

Cade may also seek changes in legislation covering venture- capital investments.

“I don’t want to analyze small startup businesses,” Ragazzo said. “Using a minimum value as a criteria for the deal submission is one alternative we are studying,” he said, adding that countries including the U.S. take that into account in their antitrust laws.

Under the new law, buyers must submit the transaction to Cade if their revenue exceeds 750 million reais and the seller has revenue of 75 million reais or more. The size of the transaction isn’t considered.

Brazil mergers have declined 40 percent this year to $45.4 billion, data compiled by Bloomberg show. The number of deals fell to 463 from 480 in the same period last year.

To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at; Arnaldo Galvao in Brasilia Newsroom at

To contact the editor responsible for this story: Rick Green at

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