STRAIGHT TO THE POINT.
The Board (Tribunal) of the Brazilian Competition authority (the Administrative Council for Economic Defense, or “CADE”) has confirmed that the sale of a non-operational property, without the transfer of productive assets associated with an organized business activity, does not constitute a concentration act and therefore does not require prior approval from the authority. Exception: Transactions between companies in the real estate sector are not covered by this decision and will require a case-by-case assessment.
This position was unanimously adopted on February 12, 2025, in the context of Consultation 08700.007814/2024-75, submitted by the Carrefour Group. The consultation inquired whether the sale of a property that previously operated as a supermarket was subject to mandatory notification. While this decision does not legally bind CADE in relation to third parties, the Tribunal’s position and the discussions during the hearing demonstrate that it is sufficiently solid, clear, and direct to serve as general guidance for the interpretation of Article 90, II of Law 12,529.
SUMMARY OF CADE’S POSITION
Reporting Commissioner Gustavo Augusto identified key factors to distinguish between the mere acquisition of real estate asset and the acquisition of a “business”, concluding as follows:
A filing to CADE is not required if:
- The property is not part of an active business at the time of negotiations.
- The property does not have installed productive capacity that could be directly utilized by the buyer.
- The transaction involves only the transfer of the property, without additional assets such as brand, clientele, contracts, or inventory.
- The property is not considered essential or irreplaceable in the market, according to regulatory or scarcity criteria.
However, a filing will be required if:
- The property is still part of an active business at the time of negotiation.
- The transaction includes the transfer of additional productive assets, such as machinery, inventory, or commercial rights.
IMPLICATIONS FOR THE REAL ESTATE SECTOR
CADE’s decision has significant implications for the real estate industry but does not eliminate the need to assess the notification requirements for its transactions. The Reporting Commissioner emphasized that this decision does not automatically apply to transactions between competitors in the real estate sector, as such cases involve specific considerations that require a more detailed competitive analysis.
In particular, certain properties may be considered “essential” or “irreplaceable,” which could justify their prior review under merger control rules. The Commissioner cited as an example the acquisition of land in markets where there are significant entry barriers preventing competition.
Thus, CADE is expected to further examine the real estate sector to establish clearer criteria for determining when property acquisitions between competitors may impact competition. Consequently, the guidance established in this consultation should not be interpreted as an absolute precedent for transactions between competitors.
HELPFUL, BUT NOT A FINAL RESOLUTION
While CADE’s position is now well-defined and represents a major step forward for legal certainty, two key considerations remain:
- CADE will remain vigilant to prevent attempts to circumvent regulations, such as the artificial suspension of business activities or other mechanisms that might disguise transactions subject to prior review.
- Companies in the real estate sector or those regularly engaging in this type of transaction should continue assessing case-specific elements to determine whether a filing to CADE is required, ensuring full compliance with law.
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