The Administrative Council for Economic Defense (CADE) has released the final version of Guide V+(in Portuguese), the Guide for the Analysis of Non-Horizontal Mergers. The Guide V+ was approved by CADE’s Tribunal at the 228th Ordinary Judgment Session held on April 17, 2024. The draft of Guide V+ had been under discussions at the antitrust agency since 2022, and was subject to a public consultation from July 20 to September 18, 2023.
The document guides the analysis of mergers and acquisitions that do not involve direct competitors. These transactions, known as non-horizontal mergers, include both vertical mergers (involving companies operating at different stages of the production chain) and conglomerate mergers (transactions that do not qualify for the other categories, such as horizontal, diagonal, or vertical mergers, but in which the companies involved are somehow related – e.g., they have similar customers, products, or production processes).
The publication of Guide V+ reflects the international trend of giving greater focus to non-horizontal transactions, among other aspects, due to the increase in cases involving digital platforms that have raised greater discussions of vertical integrations and conglomerate effects.
Guide V+ presents the best practices and procedures adopted by CADE in the analysis of non-horizontal concentration acts. The document is structured in five stages of analysis: (i) definition of relevant markets; (ii) determination of market share and concentration index; (iii) analysis of potential harms to competition; (iv) analysis of the net benefits arising from the transaction; and (v) antitrust remedies.
Although the Guide is not binding or prescriptive, it is expected that it will be used as a general guideline in CADE’s future analyses involving non-horizontal mergers.
From CADE’s perspective, the Guide aims to assist the authority in adopting best practices when analyzing non-horizontal transactions, and promoting a consistent and effective approach by the Brazilian antitrust authority. From economic agents’ perspective, as well as the market as a whole, Guide V+ expects to bring greater clarity on the analysis criteria to be adopted by CADE in future transactions and the risks involved, which could be useful to assist the agents involved in these types of transactions in their decision-making.
