One of the Competition Authority’s responsibilities is merger control. The main goal is to ensure that a merger or other concentration of companies, and the consequent market changes, do not harm competition or consumer well-being.
A merger [in Portuguese] occurs whenever there is a change of control over part or all of one or more companies. This can take place in three different ways:
- Merger of two or more companies;
- Acquisition of control of all or part of the share capital or assets of one or more companies;
- Creation of a joint venture that acts on the market independently of its parent companies.
There are, however, some exceptions to the concept of merger operation above. These exclusions refer to:
- Acquisitions made by court-appointed insolvency managers;
- Acquisitions of shares with the mere purpose of providing a guarantee;
- Acquisitions by credit institutions, finance companies, or insurance holding companies in a sector different from theirs, on a temporary basis and for resale within a year.
The joining of two or more companies can be beneficial when it allows reducing costs for the benefit of consumers, companies themselves, competitive markets, and the economy.
What decisions can the AdC take concerning merger control?
More than 90% of merger operations are approved by the AdC, as they do not significantly harm competition or consumers.
In the remaining cases, one of the following situations may happen: either the AdC prohibits the transaction or accepts the commitments that the company proposes to prevent negative impacts on competition and consumers. These commitments may include, for example, the sale of a part or parts of the resulting business.
In its assessment, the AdC considers multiple factors such as market shares, the structure of relevant markets, the market power of buyers, and the existence of barriers to entry or the expansion of competitors.
Once notified, the AdC has 30 working days to rule on a simple merger operation and 90 working days for a procedure that involves an in-depth investigation.