The Administrative Council for Economic Defense (CADE) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP) have recently executed a cooperation agreement1 (“Cooperation Agreement”), with the purpose of coordinating the activities of both agencies.
The Cooperation Agreement sets forth obligations for CADE and ANP to: (i) exchange information, data, reports, analyses and statistics; (ii) share technical opinions or results of studies and research; (iii) organize meetings, workshops and visits; (iv) exchange specialists; (v) perform joint researches and studies; (vi) organize and promote lectures, conferences, seminars, symposiums, congresses or any other events for the training of the agencies’ personnel; and (vii) jointly develop other projects and specific activities.
CADE and ANP have a longstanding cooperative relationship and, on several occasions, the agencies have acted together in the analysis and investigation of cartels in the fuel resale market. This new Cooperation Agreement is expected to increase the cooperation between the agencies in the analysis of transactions as well.
Accordingly, ANP has notified the E&P companies in Brazil, requesting that any transfer of concession rights for the exploration, development and production of oil and natural gas must be presented to ANP for approval with the submission of: (i) the copy of CADE’s final decision approving the transaction; or (ii) a statement executed by the parties confirming that the economic groups involved in the transaction do not meet the turnover threshold set forth in Law no. 12,529/2011 (“Brazilian Antitrust Law”), and therefore are not required to submit the transaction for CADE’s approval.
The Brazilian Antitrust Law sets forth that parties of a concentration act2 must notify their transaction to CADE if: (i) one economic group involved in the transaction registered gross turnover of at least R$750 million in the last financial year in Brazil; and (ii) another economic group involved in the transaction registered gross turnover of at least R$75 million in the last financial year in Brazil. Although the Brazilian Antitrust Law expressly exempts from notification any joint venture, consortium or association formed for the specific purpose of participating in tender processes for contracts with the government (such as concession contracts), CADE and ANP have adopted the understanding that the transfer of rights under concession contracts must be submitted to antitrust analysis. Therefore, companies must submit to CADE any transfer of concession rights for the exploration, development and production of oil and natural gas in which the economic groups of the parties involved meet the threshold established by the Brazilian Antitrust Law.
1 Published in the Brazilian Federal Official Gazette on April 9, 2012.
2 According to the Brazilian Antitrust Law, the following transactions are considered “concentration acts”: (i) merger between two or more previously independent companies; (ii) merger of one company into another; (iii) acquisition of tangible or intangible assets; (iv) acquisition of participation; and (v) formation of a joint venture, consortium or association.