CADE Confirms Its Stance Against Carve-Out Agreements

On January 20, 2016, the Tribunal of the Administrative Council for Economic Defense ("CADE") ruled that the companies Cisco Systems Inc. ("Cisco") and Technicolor S.A. ("Technicolor") are to pay 30 million BRL due to gun jumping practices. Pursuant to art. 88, paragraph 3º of Antitrust Law (Law No. 12.529/2011), such a violation occurs when transactions of mandatory submission are closed prior to the antitrust clearance.

The transaction involved a global acquisition in which Technicolor acquired a subsidiary, owned in its totality by Cisco, in the global broadband technology development market. On November 20, 2015, CADE learned of these facts through a press release published on the company's website, which stated that the transaction had been closed, except for in Brazil and Colombia. Three days later, the companies officially reported the facts to CADE, and disclosed to CADE the existence of a carve-out agreement covering Brazil. Cisco and Technicolor argued that