INTERNATIONAL: BRAZIL - MERGER REVIEW - CAPITAL MARKETS - COMMON OWNERSHIP - INSTITUTIONAL INVESTORS - INVESTMENT FUNDS - MINORITY SHAREHOLDERS

Brazil: Common ownership by institutional investors and its impact on competition

Brazilian capital markets have experienced a significant increase in the engagement of institutional investors (including investment funds), despite the fact intertwined companies or those with family control are still dominant in the country. In this sense, one must question whether institutional investors are promoting a procompetitive environment when applying funds in Brazilian companies. Additionally, one may raise the following competitive concern: are institutional investors in Brazil making systematic minority stock purchases in competitors? Are those situations in the radar of the Brazilian watchdog? From the empirical research carried out by these authors, it was possible to assess that the concern with minority interests in competitors has already been addressed by CADE in at least two cases. The concern with common ownership by institutional investors, however, has not yet been analyzed by the Brazilian antitrust authority, although it has been in one case. Thus, although there is still a long path ahead, there is an important understanding that the discussion is necessary and that it is possible that the anticompetitive effects of the minority interests of these agents are not sufficiently addressed.

I. CADE’S merger review of transactions regarding institutional investors 1. Brazilian capital markets have experienced a significant increase in the engagement of institutional investors (including investment funds), despite the fact that intertwined companies or those with family control are still dominant in the country. [1] Institutional investors have an important role in Brazilian companies because they finance economic activity, provide the necessary liquidity to the investees, pulverize the stockholders’ equity and dilute ownership—although still not very significant. In this sense, one must question whether institutional investors are promoting a procompetitive environment when applying funding in Brazilian companies. 2. The Administrative Council for Economic Defense (CADE in

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Authors

  • Brasilian Administrative Council for Economic Defense (CADE) (Brasilia)
  • Brasilian Administrative Council for Economic Defense (CADE) (Brasilia)

Quotation

Amanda Athayde, Mônica Fujimoto, Brazil: Common ownership by institutional investors and its impact on competition, February 2018, Concurrences Review N° 1-2018, Art. N° 86065, pp. 218-224

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