Administrative rule likely to update corporate revenue thresholds
01/30/2025
Brazil’s Ministry of Finance and Ministry of Justice and Public Security are expected to update soon the revenue thresholds that require companies to notify the antitrust watchdog named Administrative Council for Economic Defense (CADE) of mergers and acquisitions. Under Brazil’s antitrust legislation, companies are currently required to report deals if the parties involved posted revenues of at least R$750 million (one of the parties) and R$75 million (the other party) in the previous year. According to people familiar with the discussions, these thresholds will likely increase to R$1 billion and R$200 million—or maybe more.
According to sources, the update would be implemented through an administrative rule by both ministries and is primarily aimed at easing the workload of CADE’s General Superintendence—the division overseeing the initial review of mergers and acquisitions. That would allow more personnel to focus on regulating and overseeing big tech companies from a competition perspective, as part of a government proposal currently being drafted by the ministries to be sent to Congress soon.
According to government sources, this update could reduce the number of mergers requiring notification to the antitrust watchdog by about one-third, lowering the caseload.
The antitrust legislation (Law No. 12,529), enacted in 2011, originally set the revenue thresholds for mandatory notification at R$400 million for one party and R$30 million for the other. In 2012, the ministries of Finance and Justice raised these figures to the current R$750 million and R$75 million, respectively. Since then, no further adjustments have been made, despite inflation during the period.
Experts argue that the outdated figures have led to record-high caseloads at CADE, straining its lean staff. Additionally, companies have long called for an adjustment in the required threshold, as exemption from mandatory notifications would reduce legal costs.
In 2024, CADE data showed that 712 deals were reported, nearly 20% more than the previous year. In recent years, the antitrust regulator has sought ways to expedite reviews, including through artificial intelligence. The average processing time for standard cases dropped from 117 days in 2023 to 93.9 days last year.
A 2023 study by the Antitrust Research Group and the Center for Economic Freedom at Mackenzie Presbyterian University found that, based on the General Market Price Index (IGP-M), the revenue thresholds should be raised to R$1.7 billion and R$170 million.
According to Vicente Bagnoli, an antitrust law professor at Mackenzie and one of the study’s authors, the research concluded that most merger cases submitted to the regulator appear unnecessary. He noted that many deals are reported only due to outdated revenue thresholds rather than for posing a real risk of market concentration.
“Outdated thresholds contradict the spirit of the law,” Mr. Bagnoli said. He argued that adjusting the figures would allow the antitrust regulator to “optimize its resources, dedicating more time and personnel to expediting investigations into anticompetitive practices, such as cartelization and abuse of dominant position.”
Paola Pugliese, a partner at Lefosse Advogados and chair of the Competition Commission at the International Chamber of Commerce (ICC), said the update is widely welcomed by the market. “Because the current criteria have been in place since 2012 with no inflation adjustment, they now capture many more cases than when first established,” she noted.
Within CADE, opinions on the matter are divided. In early 2024, CADE President Alexandre Cordeiro suggested in an interview with Valor that other notification criteria should be modified instead of simply increasing the revenue thresholds.
“The push to update these figures seems driven by a desire to avoid notifications. Shouldn’t the goal be the opposite? Analyzing more cases would build a more comprehensive database and provide deeper insights into market dynamics. Is the antitrust regulator willing to forgo access to more data?” Mr. Cordeiro questioned at the time. “A key discussion point is whether we need to refine the criteria—perhaps using deal value alongside revenue thresholds.”
Some experts opposing the update warn that it could enable large corporations to acquire regional companies and expand their market power without the antitrust watchdog’s scrutiny.
“It’s questionable whether the update would weaken enforcement,” Ms. Pugliese countered. “Statistically, the vast majority of cases have low competitive significance.” She added that deals with a real impact on competition are unlikely to go unnoticed by CADE, which retains the legal authority to require notification even when a deal falls below the established thresholds.
Eric Hadmann Jasper, a partner at HD Advogados and an expert in antitrust legislation, echoed this view. “Updating the revenue thresholds makes a lot of sense,” he said. “It would be a simple way to free up internal resources for investigating unilateral conduct, particularly in digital markets, which are complex.”
Mr. Jasper emphasized that the antitrust regulator would still have mechanisms to detect problematic mergers, as competitors can file complaints with the agency. “It just requires vigilance, monitoring, and educational campaigns,” he noted.
CADE, the Ministry of Finance, and the Ministry of Justice and Public Security did not respond to requests for comment.
*By Guilherme Pimenta – Brasília
Source: Valor International