The Brazilian Antitrust Authority (CADE) issued a significant decision in Gun Jumping Proceeding (APAC) 08700.003565/2024-49 regarding a domestic airline codeshare agreement. In a unanimous ruling, the Tribunal confirmed that the agreement was not subject to mandatory notification under resolution 17/16 because associative contracts - including contracts with an indefinite term - are only subject to compulsory notification once they reach or exceed two years in duration.
1. Background: APAC 08700.003565/2024-49 and resolution 17/16
Resolution 17/16 sets three cumulative conditions for an agreement to qualify as an associative contract subject to mandatory prior notification (assuming turnover thresholds are met): (a) duration equal to or greater than two years; (b) sharing of risks and results of the economic activity; and (c) parties that are competitors in the relevant market in the scope of the agreement.
For contracts with an indefinite term, Art. 3 of resolution 17 states that contracts “must be notified (…) if the period of two years, counted from their signature, is reached or exceeded.” The General-Superintendence (SG) concluded - and the Tribunal agreed - that the contract did not meet the formal criteria for mandatory notification as an associative contract, primarily because the agreement lacked a specific term and the two-year duration threshold had not yet been reached.
The decision acknowledges criticisms that “indefinite term” may sometimes be used to avoid notification but stresses that the case must be decided under the current text of resolution 17/16, which conditions mandatory notification on reaching the two-year mark.
2. The Decision: Call-In Order Under Article 88(7) and Policy Guidance
The Tribunal decided, unanimously and in line with the Reporting Commissioner’s vote, to maintain the SG’s conclusion of no mandatory notification, since the period of two years had not yet elapsed. At the same time, the Tribunal applied Art. 88, paragraph 7, of the Competition Law (law 12,529/11) to call in the transaction, requiring notification within 30 days after publication of the judgment minutes. If the order is not complied with, the parties must immediately suspend implementation of the codeshare agreement.
The judgment further recommends that all codeshare contracts between national airlines be analyzed by CADE, either through spontaneous prior notification or by application of Article 88(7). The Tribunal also ordered that a copy of the decision be sent to the National Aviation Agency (ANAC), National Consumer Secretariat (SENACON), and the Senate’s Economic Affairs Committee (CAE), highlighting the cross-cutting relevance of codeshare arrangements. Concurring votes explore interpretative issues around associative contracts and sectoral experience (telecom RAN sharing, maritime vessel sharing, etc.). The operative holding remains anchored in the Reporting Commissioner’s vote: no mandatory notification under current Resolution 17 thresholds, combined with robust use of Art. 88(7) to assess the effects of the domestic codeshare agreement.
3. Key Legal and Policy Takeaways
A. Confirmation of the Two-Year Threshold – Including for Indefinite-Term Contracts
The decision reiterates that an agreement will only be characterized as an associative contract subject to mandatory prior notification if it meets all three conditions in Article 2 of Resolution 17, including a duration of two years or greater. For contracts with indefinite duration, Article 3 is reaffirmed: notification is required if the contract has been in force for two years or more, counted from the date of signature. The Reporting Commissioner notes criticisms of the strategic use of “indefinite term” and suggests CADE may consider better drafting in the future, but underscores that the present case must be analyzed under the existing text.
B. Art. 88(7) as a Flexible Call-In Tool for Non-Mandatory Transactions
APAC 08700.003565/2024-49 illustrates CADE’s use of Art. 88(7) to require notification of transactions below mandatory thresholds, with non-compliance linked to suspension of the codeshare agreement. This mechanism enables the preventive control of transactions that do not yet meet all formal criteria under resolution 17.
4. Dynamic but Text-Bound Interpretation of resolution 17/16
CADE views core concepts in resolution 17 (common enterprise, sharing of risks and results, horizontal competition) as open standards shaped by case law, as reflected in RAN sharing and maritime cooperation precedents. At the same time, the winning vote is clear that, until Resolution 17 is amended, mandatory notification conditions remain those in Arts. 2 and 3, including the rule that indefinite-term contracts become notifiable when they reach two years. A broader view, treating indefinite-term contracts as immediately notifiable, is part of a prospective policy debate, not the law applied in this case.
5. Practical Implications for Companies
A. For Airlines and Other Transport Operators
Do not assume that the absence of a formal mandatory threshold means no review. Even if a domestic codeshare does not yet satisfy the duration requirement under resolution 17, CADE can utilize Art. 88(7) to initiate notification and, if necessary, order suspension - plan for early engagement with CADE on domestic codeshares. Considering the Tribunal’s recommendation, parties should consider spontaneous prior notification or early consultations to mitigate the risk of call-in and transaction disruption.
B. For Parties to Associative Contracts in Other Sectors
Screen long-term cooperation under both resolution 17 and Art. 88(7). Agreements involving a common enterprise, shared risks and results, and competitors - such as network sharing in telecom, vessel sharing in shipping, or capacity sharing in energy and transport - should be reviewed against the two-year mandatory threshold and the potential for call-in under Art. 88(7). Use contract duration and renewal clauses strategically within the current framework. Indefinite-term contracts are not automatically associative; they become notifiable after two years. CADE may scrutinize indefinite duration clauses that appear designed to circumvent notification, with Article 88(7) as a backstop.
C. For In-House Counsel and Transaction Planners
Incorporate call-in risk into deal timetables. Article 88(7) can require notification of an implemented cooperation and even force its suspension. Approval processes should allocate time and resources for potential CADE engagement, even when deals do not cross formal thresholds at signing. Monitor potential revision of resolution 17/16. The Reporting Commissioner’s acknowledgment of drafting issues - particularly regarding indefinite-term contracts - and sector-specific learning suggest possible future changes. For now, the two-year threshold is the decisive criterion for mandatory notification, with Art. 88(7) operating as a complementary tool.
6. Looking Ahead
APAC 08700.003565/2024-49, decided in line with Reporting Commissioner Carlos Jacques’s vote and unanimously adopted by the Tribunal, reinforces legal certainty regarding the current mandatory notification regime for associative contracts and showcases the practical relevance of Art. 88(7) as a call-in mechanism for complex cooperation in concentrated markets.
The key message for companies is clear: formal thresholds still matter and were expressly upheld, including the rule that indefinite-term contracts become mandatorily notifiable after two years. Yet, in aviation and other infrastructure sectors, sophisticated cooperative arrangements - like domestic codeshares - are unlikely to remain below the radar, as CADE stands ready to rely on Art. 88(7) to ensure that high-impact transactions receive appropriate prior scrutiny.