On December 13 the Administrative Council for Economic Defense (Cade) Court granted for the first time a request for early and preliminary authorization for the consummation of a transaction..
With the entry into force of Law No. 12,529/2011 (Antitrust Law), Brazil adopted a suspensory regime, under which the approval of Cade is a condition precedent to closing.
Cade's Internal Rules provide that, under extraordinary circumstances, Cade’s Administrative Tribunal may grant early and preliminary authorization for the consummation of a transaction upon request of the interested party, which must demonstrate that (i) there is no danger of irreparable damage to competition conditions; (ii) the measures for which authorization is sought are fully reversible; and (iii) substantial and irreversible financial losses to the target company are imminent.
Cade’s authorization was granted in the context of the acquisition, by Excelente B.V. (Excelente), of the total capital stock of Rio de Janeiro Aeroportos S.A. (RJA), created to operate the concession of the Galeão Airport. RJA was owned by Excelente (40%), jointly with Odebrecht Transport Aeroportos S.A. (OTP) (60%). RJA held 51% of the capital stock of Concessionária Aeroporto Rio de Janeiro (Carj) , jointly with Empresa Brasileira de Infraestrutura Aeroportuária – Infraero (49%).
That transaction was filed with Cade on December 8, 2017, and the authorization for early consummation was requested on the same date, based on the financial difficulties faced by RJA and Carj. Such difficulties were allegedly aggravated due to the impossibility of closing the acquisition, by the Chinese company Hainan HNA Infrastructure Investment Group Co., Ltd. (HNA), of OTP’s 60% shareholding in RJA. Although Cade had cleared that transaction, the necessary regulatory authorizations in China were not granted within the timeframe set by Anac (National Civil Aviation Agency). As a result, OTP was not able to meet certain payment obligations with Anac.
The consolidation of the control of RJA by Excelente was cleared by Cade’s Superintendence-General only four days after the filing, and the case files were sent to Cade’s Administrative Tribunal with a recommendation of granting the authorization for early consummation was requested.
Such request was granted by Cade’s Administrative Tribunal based on the following arguments: (i) The transaction had already been reviewed by the Superintendence-General, which concluded that the increase in Excelente’s shareholding would not alter the competitive environment; (ii) the transaction could be reversed if the Superintendence-General’s clearance decision was not confirmed by the Tribunal following a third party appeal or a request for revision of one of the Tribunal’s members , through the sale of the shareholding acquired from an independent third party; (iii) Excelente demonstrated imminent and irreversible financial losses for RJA, essentially in the form of losses by Carj in the provision of public services due to the need to pay the first installment of the airport concession by December 20, at an amount of more than R$ 1 billion.
Accordingly, the parties were allowed to close the transaction immediately, without having to wait for the expiration of the 15-day waiting period following the publication of the Superintendence-General decision.
In its first statement on the subject, Cade’s Administrative Tribunal emphasized the extraordinary nature of the preliminary authorization, which should not jeopardize the suspensory regime under which the closing of transactions subject to Cade's scrutiny can only take place once the agency decision becomes final and enforceable.
