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Legal Update

CADE Issues New Regulation on Associative Agreements

7 November 2014
Tauil & Chequer Legal Update

On November 4, 2014, the Official Gazette ("Gazette") published CADE Resolution No. 10/2014, which establishes the hypotheses of Associative Agreements (provided in Art. 90, item IV, Law No. 12.529 / 2011) subject to the Administrative Council for Economic Defense’s ("CADE") scrutiny. Before, the definition of Associative Agreement had not been bound by antitrust legislation, raising several discussions on the matter.

According to the Resolution, any agreement with a term in excess of two (2) years is considered “associative”, when there are horizontal or vertical cooperation or sharing of risk; which result in an interdependence relationship between the contracting parties (i.e., entities directly involved in the transaction and their respective economic groups).

Additionally, it is considered that there is horizontal or vertical cooperation or sharing of risk, which result in an interdependence relationship:

I – in agreements where the parties are horizontally related, whenever the sum of their market shares in the relevant market affected by the agreement is equal or superior to twenty percent (20%); or

II –  in agreements where the contracting parties are vertically related, whenever one of them holds at least thirty percent (30%) or more of the relevant markets affected by the agreement, and given that at least one of the following conditions are met:

a) the agreement establishes the sharing of revenues or losses between the parties;
b) an exclusive relationship is derived from the agreement.

According to the best interpretation, although the Resolution has left open a few definitions, it has signaled that the sharing of revenues or losses, or the existence of an exclusive relationship constitute elements which characterize interdependence between the parties.

With regard to agreements with less than a two-year term, the Resolution stated that, once the criteria for revenue between the parties is met, it must be submitted to CADE when, upon its renewal, the two (2) year term is reached or exceeded.

The Resolution enters into force on January 5, 2015 (that is, 60 days after its publication in the Official Gazette).

Finally, it is noteworthy that such Resolution is part of a series of measures adopted by CADE aimed at bringing greater stability and legal security to society. On October 29th, 2014, for example, CADE has initiated a Public Consultation proceeding on proposals for resolutions that discipline the Administrative Procedure for the Analysis of Mergers ("APAC") and the procedure to formulate Consultations with the antitrust agency, besides having recently made ​​changes in its Internal Regulation and Resolution No. 02/2012.

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