STRAIGHT TO THE POINT
Brazil’s competition authority, CADE, has signaled that not every cross-border transaction must be filed locally, even where the buyer’s and seller’s economic groups comfortably exceed the statutory revenue thresholds. Where the target is located outside Brazil and generated less than BRL 75 million in Brazilian turnover in the year before signing, CADE’s General Superintendence, or SG, has indicated that it will not review the deal, effectively creating a de minimis filter.
1. This is a meaningful shift in practice and one worth flagging for anyone structuring international M&A with a Brazilian angle, even if the decision does not apply to newly formed entities, such as greenfield joint ventures or associative contracts, because they have no prior turnover to measure.
2. Under Brazilian merger control rules, three criteria determine whether a transaction must be notified: (i) whether the transaction is a concentration within the scope of Article 90 of Law No. 12,529/2011; (ii) whether the economic groups involved meet the Brazilian revenue thresholds, currently BRL 750 million for one group and BRL 75 million for another, under Article 88; and (iii) whether the transaction has effects in Brazil (local nexus).
3. The latter local-nexus requirement had been discussed before, but it had not previously been translated into a clear, objective de minimis threshold. CADE has now effectively introduced an additional filter: if the target is located abroad, the target itself must have generated more than BRL 75 million in Brazilian turnover in the year preceding the transaction, regardless of the size of the buyer’s and seller’s economic groups.
4. The new approach emerged in Case No. 08700.003063/2026-80, involving Lin Yin International Investments, a Foxconn subsidiary, and its acquisition of a 50% stake in Mitsubishi Fuso Bus Manufacturing. The parties described the transaction as aimed at “creating a joint venture to develop and manufacture sustainable bus solutions.” Both economic groups comfortably exceeded the BRL 750 million threshold. However, because the target was located outside Brazil and had Brazilian revenues below BRL 75 million, the SG held that the transaction lacked a “material economic-territorial nexus” with the Brazilian market and was therefore not subject to mandatory notification.
5. Curiously, although the parties expressly described the transaction as a “joint venture,” the SG technically characterized it as the acquisition of joint control over a previously wholly owned entity, and then applied the new turnover-based filter. The decision therefore does not apply to newly formed entities, such as greenfield joint ventures or associative contracts, because those entities have no prior turnover against which the filter could be applied.
6. The distinction is technically defensible, but it shows that the commercial label adopted by the parties may diverge from CADE’s structural characterization of the transaction. Practitioners will need to anticipate that gap when assessing notification strategy.
7. The decision also leaves open how the new BRL 75 million target-specific threshold interacts with the existing turnover criteria under Article 88. The statute requires one group with turnover above BRL 750 million and another with turnover above BRL 75 million in Brazil, without requiring either side to be the buyer or the seller. The new target-specific threshold appears to add a separate, cumulative test. It is not entirely clear, however, whether the target’s BRL 75 million turnover is meant to replace the seller group’s contribution to the second leg of Article 88, or whether it stands as an independent filter applied on top of the statutory thresholds.
8. As noted in the decision, the new approach is broadly aligned with international standards, including OECD and ICN recommended practices, which advocate for a material-nexus test in cross-border merger review. From a practical standpoint, the decision is welcome: it reduces filing burdens for deals with no meaningful local footprint and frees CADE’s resources for cases with genuine competitive impact in Brazil.
9. That said, international alignment does not resolve the more fundamental question of whether the SG has the authority to create this new rule. Article 88 defines the turnover thresholds by reference to the “groups involved in the transaction,” a criterion CADE’s own case law has long read as capturing the buyer’s and seller’s economic groups as a whole, regardless of the target’s standalone size or deal value. By introducing a new target-specific threshold through a non-binding administrative decision, the SG is narrowing the scope of mandatory notification by administrative interpretation.
10. Whether it may do so through precedent, rather than by formal resolution or legislative amendment, is debatable. Parties should welcome the reduced burden, but proceed with caution: the new approach has not yet been confirmed by CADE’s Tribunal and may still face future challenge.
11. Our team is available to discuss how this development may affect notification strategy for cross-border transactions with a Brazilian nexus.