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URÍA & MENÉNDEZ |
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The information contained in this Newsletter is of a general nature and does not constitute legal advice |
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COMPETITION LAWRECENT DEVELOPMENTS IN BRAZILIAN, PORTUGUESE AND SPANISH COMPETITION LAW INTRODUCTION Significant amendments of Brazilian, Portuguese and Spanish Competition Law have been recently adopted. In particular, in Brazil, a new fast-track merger review procedure has been established in order to speed up the appraisal of certain operations of concentration. In Portugal, an extensive reform of Competition law is currently under way, which has led to the creation of a new Competition Authority, and foresees the adoption of a new Competition Act in the near future. Finally, in Spain, a new Decree Law on block and individual exemptions of agreements restricting competition has been adopted.
BRAZIL: FAST-TRACK MERGER REVIEW PROCEDURE* On 18 February 2003, the Secretaria de Acompanhamento Econômico of the Ministry of Finance (the “SEAE”) and the Secretaria de Direito Econômico of the Ministry of Justice (the “SDE”) adopted a provision (the “Joint Resolution 1/03”) which established a fast-track merger review procedure. The Joint Resolution entered into force on 19 February 2003. This provision did not amend Act 8884/94 (the “Brazilian Antitrust Act”), which requires the filing of a notification to the authorities of a concentration whenever (i) the market share of any of the parties to such concentration, or the group of companies resulting therefrom, exceeds 20% of a relevant market, or (ii) any of the parties to such concentration -or the group of companies to which they belong- had a gross worldwide turnover exceeding 400 million reais (approximately $130 million dollars) in the previous financial year. However, the Joint Resolution 1/03 has reduced the review and clearance periods of concentrations which, although subject to mandatory notification to the Antitrust Authorities, are not likely to affect the relevant Brazilian market. To this end, it has introduced an expedited procedure for those concentrations which -according to the discretionary opinions of SDE and SEAE- do not restrain competition or result in the control of a given relevant market. The SDE and the SEAE will each have 15 working days -the SEAE’s deadline counting from the date of the applicants’ filing and the SDE’s from the date it receives the opinion from the SEAE- to issue their respective opinions to the Conselho Administrativo de Defesa Econômica (the “CADE”). Therefore, if the resolution is used effectively, the period of analysis for both agencies may be reduced to 30 working days from the date of filing before the SEAE. The categories of economic concentration that may be subject to the fast-track review procedure include those that involve: (i) the purchase of franchises by their franchisors, as long as there is no modification in the market control in the relevant markets; (ii) the creation of joint ventures in markets where none of the co-venturers are present (nor in vertical or horizontal related markets); (iii) the corporate restructuring of companies from the same (de facto or de jure) economical group as long as it does not imply a modification in the control of certain relevant decisions (concerning the level of production, sales, investments in technology and development of the companies) [however, it could be questioned to what extent such restructuring would amount to a concentration]; (iv) the acquisition of a controlling-stake in foreign or Brazilian companies, when the business activities of the acquiring company or its group in the Brazilian market are not significant; (v) the acquisition of a company where the acquirer (or its group) was not previously present in the relevant market, was not present (or such presence was insignificant) in vertically related markets, or was not present in any other market where the acquired company (or its group) is present; (vi) the market share of any of the parties to the concentration in the relevant market, or their group, is small; and (vii) other cases deemed to be simple by the SEAE and the SDE. However, the concentrations which meet the above mentioned conditions, will not be subject to the fast-track review procedure in the following cases: (i) conglomerations (operations which, without horizontal or vertical concentration, may reinforce the market power of the parties, through the combination of technological or financial resources); (ii) newly-created markets; (iii) operations of restructuring of companies which imply a modification of the control of certain decisions (as listed in point iii above); (iv) the acquisition of a controlling-stake in Brazilian companies where even if the turnover of the acquiring group in Brazil is small, it implies the control of a substantial part of the relevant market, and/or where the operation involves the acquisition of a potential competitor in the relevant market; (v) the acquisition of a controlling-stake in a foreign company which is a potential competitor in the relevant market; and (vi) certain concentrations which affect relevant markets where there are either high barriers to entry, a high degree of concentration or other competition problems. The objective of the Joint Resolution 1/03 was to rationalize the Brazilian merger review process, thus making the review period less time-consuming and burdensome to applicants and to the Antitrust Authorities themselves. However, surprisingly enough, it does not provide for a simplified filing questionnaire. Therefore, the standard form of filing applies also for the fast-track procedure.
PORTUGAL: COMPREHENSIVE REFORM OF COMPETITION LAW A substantial reform of Portuguese competition law is currently under way. The Decree-Law 10/2003 (the “new Decree”), of 18 January 2003, has already introduced certain interim procedural amendments to Decree-Law 371/93, of 29 October 1993, which rules competition law in Portugal. However, this partial reform must still be completed through the adoption of a new Competition Act (so far only available in its draft form, the “Draft Bill”), which will introduce both substantial and (definitive) procedural amendments. The new Decree has created a new Competition Authority (“Autoridade”) which assumes the functions of the former “Conselho da Concorrência” and the “Direcção-Geral do Comércio e da Concorrência”. The Autoridade, which started operating on 24 March 2003, is conferred a statute of independence, although its members are appointed by the Government upon proposal of the Minister of Economy, which keeps certain supervision powers. The new Decree extends the area of competence of the Autoridade to all sectors of economic activity, and establishes a reinforced cooperation and coordination with sectorial regulatory authorities. As regards the operations of concentration, and until the abovementioned Draft Bill is formally adopted, the new Decree establishes transitory rules in relation to the period assigned to the Autoridade to rule on the authorisation of a given concentration. According to the new timetable, the deadline for approval is reduced to 60 working days, and if no decision is adopted in such term, the concentration will be deemed tacitly authorised. However, the Draft Bill in its current form foresees establishing a two-phase system, of 30 and 90 days respectively, in line with the EU Merger Control Regulation. Generally, the Draft Bill intends to amend the Portuguese legislation to render it coherent with the Community competition rules. Furthermore, in the process of evaluation of concentrations the involvement of the Government has been significantly reduced, given that the Minister of Economy will in principle not participate in the appraisal of concentrations. However, the Minister will be able to review (through a new appeal procedure introduced by the new Decree), upon request of the notifying companies, a decision of the Autoridade prohibiting a concentration, provided that the benefits resulting therefrom exceed its restrictive effects. Finally, the decisions of the Autoridade and of the Minister may be appealed before the Lisbon Tribunal of Commerce. However, on a transitory basis the review of certain decisions, such as the one of the Minister, will still be under the control of the administrative courts.
SPAIN: AMENDMENTS TO THE REGIME ON BLOCK AND INDIVIDUAL EXEMPTIONS The Spanish regime on block and individual exemptions of agreements restricting competition was recently amended by Decree Law 378/2003, of 28 March 2003 (the “new Decree”). The new decree came into force on 16 April 2003 and repealed Decree Law 157/1992, of 21 February 1992 (the “former Decree”). The reform essentially consists in (i) an update of the Spanish regime on block exemptions and its adaptation to the Community block exemption regulations currently in force, and (ii) an amendment of certain aspects of the procedure governing individual exemptions. Update of the Spanish regime on block exemptions The new Decree updates the Spanish regime on block exemptions and brings it in line with the currently applicable Community regulations. In particular, the new Decree incorporates into Spanish law the regulations applicable to the following categories of agreements: (i) vertical agreements; (ii) motor vehicle distribution agreements; (iii) technology transfer agreements; (iv) specialization agreements; (v) research and development agreements; and (vi) agreements in the insurance sector. The new Decree also provides for the automatic reception into Spanish law of the amendments and substitutions that Community block exemption regulations may experience in the future. This update of the Spanish regime on block exemptions puts an end to the previously uncertain situation, since the former decree had established a reference to the specific Community regulations in force in 1992, but without foreseeing their amendment or derogation. As a consequence, once such Community regulations were derogated, it remained unclear whether they were still applicable in Spain. Whereas the competent authorities initially considered that it was necessary to grant individual exemptions, they subsequently held that the derogated Community regulations were still in force in Spain. Amendments to the individual exemption procedure The new Decree establishes that, in line with the equivalent Community provisions, no fines will be imposed on conducts which have been performed since the submission of a request on an individual exemption, except if the authority expressly opposes the implementation of such practices. Lastly, in relation to renewal of individual exemptions, the new Decree provides that the Court for the Defence of Competition may grant such renewal automatically, without necessarily initiating a specific procedure for that purpose, but having in any event received a monitoring report from the Service for the Defence of Competition. * Prepared by Dias Carneiro Advogados, in association with Uría & Menéndez
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