Do you know what an associative contract is? Can you find a good definition for it? No? Do not worry, in Brazil a lot of people are trying to do it, and we still have more questions than answers. In the meantime we have to deal with a law in force that requests merger control for such kind of agreements.
Going a little back, the well-known Brazilian antitrust law, enacted in 1994, created two conditions for a transaction to have to be notified: (i) one of the parties should have revenues, in the year before the signing of the transaction, of R$ 400 million and (ii) the transaction would result in a market share of 20%. It goes without saying that free competition and/or market dominance should be verified but, strangely enough, this condition did not mean much for most of the time.
A new law, enacted in 2011 and which came into force in 2012, when establishing the requirements for merger control, left the market share criterion aside; it was celebrated with a lot of relief because we know that we can use this definition in different ways. So, the big requirement was for (i) one of the parties to have revenues, in the year before the signing of the contract, of R$ 750 million and (ii) another party to have revenues, also in the same year, of R$ 75 million. [Read more…]