header_logo
cancel1

Brazil

Last Verified on Tuesday 18th June 2019

    Competition law enforcement

    • Brazil

      Brazil has a competition statute since at least 1962, with the enactment of Law No. 4,137. However, this law was not fully enforced in practice, owing to an economic policy based on strong state intervention through price control and government-owned enterprises.

      The first effective competition legislation in Brazil was adopted in 1994 by means of Law No. 8,884, enacted in 1994 concurrently with significant liberalisation reforms. After almost two decades in force, this statute was repealed by Law No. 12,529/2011 (the Brazilian Competition Law, or BCL), which entered into force on 29 May 2012.

      The most important changes established by the BCL concern merger review and the institutional structure of the authorities. The 1994 Law had established a non-suspensory merger control regime in Brazil, under which parties were allowed to close transactions before the final decision of the competition authority. Besides being at odds with international experience, this resulted in difficulties to the authorities and many uncertainties to merging parties, especially in complex transactions. The BCL set up a pre-merger review system, consistent with the reality of most countries.

      The BCL also consolidated the investigatory and the decision-making authorities into one single agency, the Administrative Council for Economic Defence (CADE), an independent federal administrative agency linked to the Ministry of Justice. Under the BCL, the antitrust authority is now divided into four main internal bodies:

      • the General Superintendency (SG), which inherited from previous agencies the powers concerning investigation of both anticompetitive conducts and mergers, and acquired additional responsibilities – especially the power to approve simpler transactions that do not raise competition concerns;
      • the Administrative Tribunal, composed of six Commissioners and a President, which is in charge of adopting final decisions in relation to (i) anticompetitive conducts, after the investigation conducted by the SG; and (ii) mergers, by either reviewing a clearance decision adopted by the SG (under appeal from third parties or a request by a Commissioner), or evaluating a recommendation of the SG to block or impose restrictions on a proposed transaction.
      • the Department of Economic Studies, responsible for preparing economic reports as requested by either the SG or the Commissioners; and
      • the Attorney’s General Office, in charge of representing CADE in all judicial proceedings and providing internal legal assistance to the other bodies.

      CADE’s decisions are final within the Federal Executive Branch, and can therefore not be reviewed by any other Ministry or Agency. However, they are subject to judicial review by federal courts.

      Last verified on Tuesday 18th June 2019

  • Merger control

    • Brazil

      According to article 90 of the BCL, a transaction can be deemed as a notifiable "concentration act" whenever: (i) two or more independent undertakings merge; (ii) one or more undertakings acquire the control or parts of one or more undertakings, by purchase or exchange of stocks, shares, bonds or securities convertible into stocks or assets; (iii) one or more undertakings incorporate other(s) undertaking(s); or (iv) two or more undertakings enter into a joint venture, a consortium or an "associative agreement".

      Acquisition of control

      According to CADE’s Resolution No. 2/2012, the acquisition of sole or joint control can be qualified as a reportable "concentration act". Such regulation does not detail the definition of "control" for merger review purposes. The antitrust agency generally accepts the identification of control as provided by corporate rules. 

      Acquisitions of minority interests

      The BCL states that the acquisition of “parts” of an undertaking can qualify as a reportable “concentration act”. Based on that, CADE’s Resolution No. 2/2012 defined the following types of transactions involving acquisitions of minority interests that must be notified:

      • the acquisition of 20 per cent or more of the total or voting capital of an invested company, which does not undertake horizontally or vertically related activities as those of the acquiring company;
      • the acquisition, by a party that already has 20 per cent or more of the invested company’s total or voting capital, of an additional interest of 20 per cent or more from a single seller, whenever the acquiring company does not undertake horizontally or vertically related activities as those of the invested company;
      • the acquisition of 5 per cent or more of the total or voting capital of a company, that undertakes horizontally or vertically related activities as those of the acquiring company; or
      • the last acquisition that, individually or jointly with other transactions, results in an additional participation of 5 per cent, whenever the acquiring company (i) already has 5 per cent or more of the total or voting capital of the invested company, and (ii) undertakes horizontally or vertically related activities as those of the invested company.

      Associative agreements

      On 18 October 2016, CADE approved the Resolution No. 17/2016, which defined the hypotheses for the mandatory filing of “associative agreements”. According to this Resolution, agreements are deemed to be “associative” if they have a term of two years or longer and set up “a joint enterprise for the development of an economic activity”. Furthermore, it is only mandatory to notify agreements in which all the following additional conditions are met: (i) the parties agree to share risks and financial results derived from the economic activity that constitute its object; and (ii) the contracting parties are competitors in the same relevant market of the one referred in the agreement.

      In this regard, CADE has recently assessed an interesting deal involving two telecom companies (Concentration Act 08700.002276/2018-84, Tim Celular SA and Oi Móvel SA). In this case, CADE’s Tribunal considered the coordination between the parties on network expansion as “joint enterprise”, and reviewed the case on the merits.   

      Last verified on Tuesday 18th June 2019

    • Brazil

      Any transaction qualified as a “concentration act” has to be submitted to CADE’s previous approval if the following turnover criteria are met:

      • at least one of the economic groups involved has registered annual gross sales equivalent or superior to 750 million reais in Brazil in the year preceding the transaction; and
      • at least another economic group involved in the transaction has registered annual gross sales equivalent or superior to 75 million reais in Brazil in the year preceding the transaction.

      For calculating the thresholds above, an economic group shall comprise (i) all companies subject to common control, and (ii) those in which any of such companies holds 20 per cent or more of the voting or total stock. If an investment fund is part of the transaction, its economic group shall include: (i) the owners of at least 50 per cent of its quotas, and their respective economic groups, as well as (ii) all companies controlled by the fund and those in which it holds at least 20 per cent of the voting or total stock.

      Finally, the BCL also grants CADE the power to request the parties to a certain transaction to submit it for review even though the thresholds for mandatory notification have not been met, within one year of its consummation. This power has been recently exercised by CADE, when it requested two distributors of pharmaceutical ingredients to submit a non-mandatory transaction after a complaint lodged by a third party. According to such third party, the transaction would imply a high level of market concentration and harm competition (Administrative Procedure to Investigate a Concentration Act 08700.006355/2017-83).

      Last verified on Tuesday 18th June 2019

    • Brazil

      Yes, according to article 88, paragraph 3 and 4 of the BCL, parties of transactions subject to mandatory review by CADE shall not consummate the deal nor change competitive conditions before the agency’s approval. Failure to obey such requirements may result in the transaction being declared null and the parties sanctioned with a fine ranging from 60,000 to 60 million reais, without prejudice of the opening of an administrative proceeding to investigate the potential anticompetitive effects arising from the acts performed by the parties.

      Nevertheless, CADE’s Internal Rules have established an exceptional hypothesis in which the parties may ask for preliminary authorisation to close the transaction before the final decision of the authority, once the following cumulative conditions are met: 

      • there is no danger of irreparable damage to the competitive conditions of the relevant market(s);
      • the measures to be adopted are fully reversible; and
      • the party that required the authoriaation proves that the acquired firm may suffer substantial and irreversible financial losses if the authorisation is not given.

      Such kind of authorisation has been issued only once by CADE, in a concentration act from December 2017 that involved the acquisition of an airport operator, which would not be able to meet a significant regulatory obligation had the authority not allowed the anticipated consummation of the transaction. (Concentration Act 08700.007756/2017-51).

      Finally, CADE has issued in 2015 a detailed guide explaining acceptable and prohibited conducts among parties to a notifiable “concentration act”. It is available in English at http://en.cade.gov.br/topics/publications/guidelines/guideline-gun-jumping.pdf.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Even if the parties meet the turnover thresholds, foreign-to-foreign transactions incapable in any reasonable way of affecting the Brazilian market are exempt from mandatory notification to CADE. The leading case in which the authority acknowledged its lack of jurisdiction involved a joint venture for the provision of car maintenance services in Germany (Concentration Act 08700.001204/2013-13).

      Thus, CADE has jurisdiction to review any foreign-to-foreign transaction (i) that qualifies as a “concentration act” (question 2); (ii) whose parties meet the applicable turnover thresholds (based on question 3); and (iii) that can potentially affect the Brazilian territory.

      An interesting recent example involved a joint venture between Yahsat and Echostar to offer satellite broadband connectivity services in Africa, the Middle East and southwest Asia (Concentration Act 08700.005838/2018-41). In this case, the Brazilian antitrust authority concluded that the relevant geographic market for the transaction (satellite telecom services) was global and, therefore, comprised Brazil. Moreover, the joint venture would employ the capacity of a satellite licensed to operate in Brazil. Thus, even though the joint venture would not operate in the Brazilian territory, the transaction could potentially impact competition in the country, so CADE asserted its jurisdiction to review the case on the merits.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Summary proceeding

      There is no pre-notification requirements under the BCL or other regulations. Cases that are eligible for fast-track proceeding (ie, those that objectively do not raise competitive concerns) are generally submitted without any pre-notification interactions with the authority, based on a simplified notification form and are often cleared by the SG within 30 days, based on CADE’s Resolution No. 16/2016. According to CADE’s 2018 Annual Report, the average duration of fast-track reviews was 13.3 days, which comprehend the vast majority of merger cases analysed by the authority (83 per cent).

      After the SG issues its clearance decision under the fast track proceeding, there is a 15-day deadline for either (i) an appeal from third parties; or (ii) a request from a Commissioner of the Administrative Tribunal to review the decision. If none of these events take place, the decision becomes final.

      Ordinary proceeding

      More complex cases (ie, those not eligible for fast track) are subject to the ordinary proceeding. The SG expects and actually recommends parties aiming at submitting a concentration act under the ordinary proceeding to informally contact the authority prior to the actual filling. These pre-notification interactions can involve phone calls and meetings, as well as the submission of a draft notification form.

      According to the BCL, the merger review process can take up to 240 days, extendable to another 90 days of total review period – ie, including both the SG and (if this is the case) the Tribunal’s phases. These statutory limits start running on the date a complete notification is filed with CADE, and, once this happens, they cannot be suspended.

      In practice, according to a SG’s handbook, the following time frames tend to be observed in the investigation of transactions submitted under the ordinary proceeding:  

      Simple concentration acts

      Up to 45 days

      Medium complexity concentration acts

      Up to 75 days

      High complexity concentration acts

      Up to 120 days

      Taking into account only the cases analysed in 2018, the average time was 96.3 days for the complete review of all transactions under the ordinary proceeding, regardless of their complexity. Nevertheless, some of the most complex cases reviewed last year have demanded a much longer proceeding at both the SG and the Administrative Tribunal, such as (i) the acquisition of Liquigás by Ultragaz (327 days) (Concentration Act 08700.002155/2017-51); and (ii) acquisition of Monsanto by Bayer (293 days) (Concentration Act 08700.001097/2017-49).

      Last verified on Tuesday 18th June 2019

    • Brazil

      See question 7.

      According to CADE’s Resolution No. 2/2012, the following types of transactions are eligible for the fast-track proceeding:

      1. classic or cooperative joint ventures;  
      • substitution of economic agent;
      • transactions involving horizontal overlaps with a combined market share under 20 per cent 
      • transactions involving vertical integration in which the combined market share of the parties does not surpass 30 per cent in any vertically related market; and
      • transactions implying a variation of the Herfindahl–Hirschman Index (HHI) lower than 200 and a combined market share lower than 50 per cent.

      Notwithstanding the above, the ultimate decision to accept a case under the fast track proceeding is at the SG’s discretion.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Closing a transaction subject to mandatory filing before CADE’s final approval can be characterised as a violation of the gun-jumping provisions of the BCL, and result in the application of the sanctions of nullity of the acts and fines ranging from 60,000 to 60,000 million reais. 

      CADE imposed the record 30 million reais fine to a gun-jumping offence in 2015, after two foreign companies acknowledged their transaction had been consummated before the authority’s approval (Concentration Act Investigation 08700.011836/2015-49 (Cisco/Technicolor deal)). Also in 2015, CADE has issued its Guidelines for the Analysis of Previous Consummation of Merger Transactions, which illustrates the types of activities that can be deemed illegal by the authority. According to the Guidelines, the parties must keep their structures and competitive behaviour unchanged until CADE’s final decision, and are not allowed to (i) transfer any asset; (ii) cause any influence over one another; and (iii) exchange sensitive or confidential information that is not strictly necessary for the execution of a formal and binding agreement.

      Last verified on Tuesday 18th June 2019

    • Brazil

      CADE’s Internal Rules establish a special regime for public takeover bids, which can be notified after their announcement and liquidated before the authority’s clearance. However, the voting rights derived from the acquired shares shall not be exercised until CADE’s final decision.

      In 2018, CADE had the opportunity to review three competing public offers for the acquisition of control over the same company, Eletropaulo – an electricity distributor. Indeed, while energy companies Energisa, Enel and Neoenergia submitted competing takeover offers, the antitrust authority evaluated three different fillings submitted by them, which were all approved (Concentration Acts 08700.002259/2018-47; 08700.002495/2018-63 and 08700.002493/2018-74). As per private equity transactions or corporate restructurings, there are no special rules.

      Last verified on Tuesday 18th June 2019

    • Brazil

      The notification and its content are disclosed after the publication of the notice in the Official Gazette, although the parties may request confidentiality over part of the information provided (eg, financial data and lists of clients and suppliers). In this case, the parties must file two versions of the notification, one with all the information requested in the standard form (which only the parties and CADE’s staff will access) and one without the confidential information (which will be publicised at CADE’s electronic system).

      Last verified on Tuesday 18th June 2019

    • Brazil

      The BCL provides CADE with broad powers to review concentration acts and investigate their potential competitive harms. The authority can request information and documents from parties, competitors, clients, suppliers, associations, government agencies or any other third party. Moreover, the submission of deceitful or misleading information to CADE is punishable with a fine ranging between 5,000 and 5,000,000 reais.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Parties to any and all transactions submitted with CADE (regardless of their complexity) shall disclose copies of the following documents: 

      • final version or more recent version of all the agreements bringing about the transaction and a list of all annexes which are relevant for the merger review procedure;
      • non-compete agreements and shareholders agreements (if applicable); and
      • last annual report and/or audited financial statements of the parties and their respective economic groups.

      Transactions submitted under the ordinary proceeding also demand the submission of analysis, reports, studies, surveys, presentations and any comparable documents prepared by or for any member(s) of: (i) the board of directors, (ii) the supervisory board, (iii) the shareholders’ meeting, or (iv) the other person(s) exercising similar functions (or to whom such functions have been delegated or entrusted), for the purpose of assessing or analysing the proposed transaction.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Once the notice is published in the Official Gazette, third parties can access all public documents regarding the concentration act, including the public version of the notification form as well as information requests sent by CADE.

      Moreover, according to CADE’s Internal Rules, any third party whose rights or interests may be affected by the final decision in the concentration act (such as competitors, suppliers, customers or trade associations) may ask the SG to be a formal interested third party in the concentration act proceeding. Such request has to be submitted within 15 days of the publication of the notice in the Official Gazette. If the request is accepted, these interested third parties have standing to appeal an SG’s clearance decision to the Tribunal.

      Last verified on Tuesday 18th June 2019

    • Brazil

      The BCL determines that “concentration acts involving the elimination of competition in a substantial portion of the relevant market, which could create or strengthen a dominant position or that can result in the domination of the relevant market of goods or services shall be prohibited” by CADE (article 88, paragraph 5).

      Such statutory provision has not resulted in a clear, articulated test for the substantive assessment of mergers by CADE, similar to those developed in the United States or the European Union.

      In any event, the Brazilian antitrust agency generally follows analytical steps analogous to those of its foreign counterparts while evaluating concentration acts. For reference, in August 2016, CADE issued the new Guidelines for Horizontal Mergers. The Guidelines set parameters and proceedings for the substantive assessment of transactions involving competitors, including the analysis of the affected markets (conditions to entry, rivalry and effective competition, among others), the causal link between the transaction and potential damage to competition, as well as efficiencies which can counteract possible negative effects.

      Last verified on Tuesday 18th June 2019

    • Brazil

      There are no explicit safe harbours protecting a transaction from potential concerns by the competition authority. That said, CADE usually does not raise competition concerns in transactions leading to combined market shares below 20 per cent, a threshold provided by the BCL itself for the identification of a “dominant position”.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Non-competition issues are generally not taken into account by CADE in the review process. The analysis of economic efficiencies, on the other hand, is required by article 88, paragraph 6 of the BCL, which states that concentration acts that raise competition concerns can be approved if they generate sufficient economic efficiencies that are equitably shared with consumers.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Yes. The parties can propose remedies to the SG during the investigation phase of the proceeding. If such proposal is accepted, it will be formalised in a draft “Concentration Act Agreement” that will be recommended by the SG to the Tribunal. If no remedies are negotiated with the SG, the investigative arm will object the transaction, and, according to CADE’s Internal Rules, the parties are entitled to submit a formal remedy proposal up to 30 days after the SG has issued its formal recommendation to the Tribunal. If this is the case, the parties may then negotiate remedies with the Reporting Commissioner at the Tribunal. In case these discussions are successful, they will result in a Concentration Act Agreement, which once approved by CADE’s Tribunal becomes an integral part of the authority’s final clearance decision.

      Although the BCL does not indicate any preference between structural and behavioural remedies, in October 2018 CADE issued its Guidelines on Merger Remedies, expressly providing that structural remedies shall be prioritised. Nevertheless, CADE admits the possibility of applying behavioural remedies when structural ones are disproportionate or insufficient to solve the identified problems.

      In recent cases, CADE’s merger remedies included: (i) selling brands of products to competitors; (ii) selling a group of plants, distribution centres and other facilities to one single competitor, so as to enable the entry of a new viable player in the market; (iii) a temporary suspension of the use of certain brands for commercial purposes in the Brazilian territory; and (iv) the prohibition of executing any exclusive dealing agreement with downstream companies.

      Last verified on Tuesday 18th June 2019

    • Brazil

      CADE’s decisions are final, and cannot be reviewed by any agency within the Federal Executive Branch. On the other hand, they are subject to judicial review by federal courts, which up to now are not specialised in antitrust issues. A typical judicial review proceeding may take up to 10 years to be concluded. 

      Having that said, considering the lengthy and costly judicial review proceeding, as well as the suspensory nature of Brazilian merger review regime, there are few incentives for parties to challenge CADE’s decision in court. A recent exception was one of the parties to the JBJ/Mataboi case, which sued the authority in order to annul the prohibition decision adopted on 10 October 2017. However, a preliminary injunction was denied and the litigation is still ongoing (Ordinary Proceeding 1015285-40.2017.4.01.3400, before the 20th Federal Court of the Federal District).

      Last verified on Tuesday 18th June 2019

  • Cartel Enforcement

    • Brazil

      According to article 36, caput, of the BCL, any conduct aimed at or capable of producing the following effects in Brazil shall be deemed anticompetitive: 

      • limiting, restraining or in any way harming competition;
      • ensuring dominance in any relevant market;
      • increasing profits on a discretionary basis; and
      • facilitating the abuse of a dominant position in a relevant market. 

      Besides these broad elements, the BCL also states, in section 3, I of the same article, that agreements among competitors to fix prices, control production, divide markets and rig bids shall be deemed illegal. In item II of the same section 3, the BCL provides that promoting a “uniform or coordinated commercial conduct” can also be deemed anticompetitive.

      In all cases, a conduct is only deemed anticompetitive if they actually or potentially cause, by its object or as a result, the effects provided in the caput. Moreover, the BCL clearly states that liability is strict (ie, no proof of intent or fault is necessary for a company or an association to be sanctioned). 

      Based on these statutory provisions, CADE currently understands that any agreements among competitors – either formal or informal – which aims at fixing prices, controlling production, allocating markets and clients or rigging bids amount to an illegal cartel. Moreover, price tables recommended or enforced by trade associations are also deemed to be illegal. In both cases, a “by object” or quasi “per se” approach is adopted, in the sense that possible efficiencies defences related to these horizontal conducts will rarely be accepted by the authority.   

      On the other hand, other kinds of interactions among competitors are evaluated under a more nuanced, “rule of reason” approach. In particular, the exchange of information among competitors may be considered illegal, depending on the sort of information involved and the potential to lower rivalry in the market.

      Last verified on Tuesday 18th June 2019

    • Brazil

      According to CADE’s case law, cartels are deemed as by object infringements. This means that the focus of the authority is in proving the existence of such agreement, since the respective anticompetitive effects provided for in article 36, caput of the BCL can validly be presumed.

      As per the standard of proof, CADE’s case law clearly states that direct evidence of the agreement among competitors is required, and that a conviction based solely on circumstantial evidence will only take place if there is no other rational explanation for the conduct at hand other than the existence of a cartel agreement. In a bid-rigging case ruled by CADE (Administrative Proceeding No. 08012.001273/2010-24), several suppliers of solar heaters were fined based on evidence such as identical offers, lack of dispute in public bids and sub hiring of one competitor by the other.

      Finally, it is worth noting that cartel agreements or collusive behaviour may be subject to penalties in Brazil, regardless of occurring within Brazilian territory and even of producing effects in practice. It is sufficient that the conduct is capable of producing effects in Brazil. For instance, several cases involving cartel arrangements abroad were sanctioned by CADE in 2018: (i) in October, CADE convicted two competitors in the Color Picture Tubes (CPT) market for participating in an alleged international cartel that divided markets and fixed prices (Administrative Proceeding No. 08012.002414/2009-92); (ii) in May, two companies were convicted for participating in an alleged international cartel in the gas-insulated switchgear (GIS) electric equipment market (Administrative Proceeding No. 08012.001376/2006-16). In these proceedings, there were several other companies that both applied for leniency and executed settlement agreements with CADE and, therefore, were not formally sanctioned by the final decision of the authority.

      Last verified on Tuesday 18th June 2019

    • Brazil

      For gathering information and evidence within the context of an investigative proceeding, CADE has broad investigative powers to:

      • request information from individuals, agencies, authorities and other government-owned or private entities, with due regard for confidentiality; 
      • request oral clarifications from individuals or businesses, agencies, authorities and other government-owned or private entities; and
      • carry out dawn raids to obtain evidence within the premises of investigated companies, after obtaining an injunction by a federal court.

      As a general rule, CADE has five years to start an investigation, counted as of the date of the possible wrongdoing or, in the event of a permanent or continued infringement, as of the date in which such conduct has ceased. Pursuant to article 46 of the BCL, when the practice under investigation may be also qualified as a crime, the limitation period shall be governed by the terms of the applicable criminal law. Based on this legal provision, CADE has usually held that, in cartel cases, the applicable limitation period is 12 years, based on the limitation period provided by the Brazilian Criminal Code and by interpreting that any sort of cartel agreement constitutes a criminal offence of “abusing economic power, by dominating the market and eliminating, totally or partially, the competition by means of any kind of arrangement or agreement among companies”, as set forth in article 4 of Law No. 8,137/1990. However, there is an ongoing debate among the members of the Tribunal as to whether the application of the criminal limitation period by an administrative authority as CADE requires a parallel criminal investigation.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Under article 38 of the BCL, CADE can apply fines ranging between 0.1 per cent and 20 per cent of the company’s gross turnover in the financial year preceding the beginning of formal proceedings in the “business segment” in which the conduct occurred. Moreover, the authority can impose other penalties, such as the publication of the decision in a widely circulated newspaper, a public procurement ban for five years, and the inclusion of the violator on the Brazilian Consumer Protection List. 

      The BCL establishes the proportionality parameters that shall be considered by the authority in the application of penalties, eg, the severity of the violation, the adverse economic effects on the market caused by the illegal conduct and the economic status of the violator (article 44 of the BCL).

      Finally, according to article 33 of the BCL, parent companies may be held liable for its subsidiaries’ anticompetitive acts, but, in principle, it has to be included as a party in the administrative proceeding to be able to defend itself.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Yes. Under the BCL, individuals acting as statutory officers can be fined administratively for participating in cartel infringements, with the amount ranging from 1 percent to 20 per cent of the fine imposed to the respective company.

      Employees of the investigated company or other individuals (such as directors of trade associations) can also be fined if involved in the anticompetitive practice being sanctioned, with fines ranging from 50,000 to 2 billion reais.

      Finally, cartels can also be characterised as a criminal offence, either generally under the Economic Crimes Law (Law 8,137/90) or, in the case of bid rigging, under the Public Procurement Law (Law 8,666/90). However, only judicial courts can apply criminal sanctions in Brazil.

      Last verified on Tuesday 18th June 2019

    • Brazil

      CADE has a leniency programme, which is only available for the first participant to come forward and inform the authority of an anticompetitive practice, confess participation in such practice, provide information not yet known by the SG about the cartel, immediately cease involvement in the anticompetitive practice and fully cooperate with the investigation. The leniency agreement provides full immunity from both administrative and criminal penalties, in exchange for cooperation with the authorities in the investigation of cartels. 

      If the SG already had prior knowledge of the reported conduct, the company and/or individual may enter into a leniency agreement with partial benefits. In this case, applicants receive the benefit of a reduction of one to two-thirds of the applicable administrative penalty, plus criminal immunity. 

      Very importantly, the leniency agreement does not protect from civil damages litigation nor from possible sanctions from other administrative and criminal enforcers in charge of investigating other illegal, possibly related conduct, such as corrupt acts in bid rigging cases.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Besides the options described in item 25, companies or individuals involved in one cartel investigation have the option to negotiate a Leniency Plus Agreement, in which the investigated party confess its participation and provides information on a second cartel not yet known by the SG.

      In a Leniency Plus Agreement, the applicant will receive the same criminal and administrative immunity in relation to the second reported cartel, and a reduction of one-third in the applicable penalty at the end of the first investigation.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Defendants can negotiate with CADE a Cease and Desist Agreement (TCC), under which the antitrust authority agrees to halt investigations against the signatories as long as they cease the alleged anticompetitive practice and comply with the negotiated terms and conditions. In the case of cartel investigations, signatories are also obliged to pay a monetary contribution based on a discounted applicable fine, and have to admit their participation in the anticompetitive conduct.  

      CADE’s Resolution No. 5/2013 determines three predefined ranges of discounts for pecuniary contributions for TCC proposals presented while the case is still under the SG’s assessment: (i) 30 per cent to 50 per cent for the first applicant; (ii) 25 per cent to 40 per cent for the second; (iii) 25 per cent or less from the third on.

      The exact discount obtained by the defendant depends on a number of factors, in particular how much it contributes with the investigation. Proposals submitted to the Administrative Tribunal are eligible for a maximum discount of 15 per cent of the applicable fine.

      Very importantly, differently from a leniency agreement, a TCC does not provide criminal immunity. Moreover, a TCC signatory is also not automatically protected from private damages lawsuits and investigations from other agencies.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Cartel investigations are usually initiated as a Preparatory Proceeding or Administrative Inquiry, in which CADE’s General Superintendence (SG) in order to collect evidence. These phases are usually confidential, and the SG may send information requests or carry out a dawn raid. By the end of the Preparatory Proceeding or the Administrative Inquiry, the SG may (i) close the case, if there is not sufficient evidence of an illegal conduct, or (ii) open an Administrative Proceeding, formally accusing the parties of participating in illegal anticompetitive practices. The defendants are serviced and given the opportunity to defend themselves, under due process guarantees. Moreover, a notice with the defendants and few aspects of the case is published in the Official Federal Gazette.

      After submitting their formal defence, companies and individuals being investigated by the SG are able to present other evidence to prove their case, including the deposition of witnesses. After the discovery phase, defendants will be able to present their final allegations to the SG, which will then issue a non-binding opinion to CADE’s Tribunal recommending the condemnation or closing the proceeding against the defendants. The case is then allocated by draft to a Reporting Commissioner, who will request opinions from the Attorney General’s Office and the Federal Public Prosecution’s Office at CADE.

      The Commissioner has the duty to review the case and submit a written vote before the Administrative Tribunal. The decision is taken in a public session, during which the defendants’ attorneys are able to present their oral arguments. A valid final decision is taken by simple majority.

      A decision has no deadline to be rendered, but if the administrative proceeding is kept on hold for more than three consecutive years, it has to be closed without a decision on the merits of the case.

      Last verified on Tuesday 18th June 2019

    • Brazil

      See question 28.

      As a general rule, information pertaining to any administrative act (such as investigations) must be publicly available in Brazil, and can be accessed at CADE’s website. Commercial and personal information, however, can be restricted, and it is only accessed by the defendants and case handlers at CADE, unless its availability to other defendants is necessary to guarantee due process. 

      CADE recently issued Resolution No. 21/2018, which sets forth the rules concerning the publicity of the documents and statements in relation to leniency agreements and TCCs. The Resolution determines that, as a general rule, the documents and information in Administrative Proceedings are public, with the notable exceptions being the leniency agreements and TCCs, which will remain classified even after the end of the proceedings. These documents will only be accessible via judicial order or after a waiver of confidentiality by the related parties.

      Last verified on Tuesday 18th June 2019

    • Brazil

      There are three possible measures that can be taken to alter or revert a condemnation decision from CADE’s Administrative Tribunal.

      The first one is a motion for clarification. It is directed at CADE’s Tribunal aiming to clarify any obscurity, material error or contradiction present in its decision. It must be submitted within five days of the publication of the decision in the Brazilian Official Gazette.

      The second one is a motion for re-evaluation, also directed to CADE’s Tribunal, aiming to expose new facts or relevant circumstances that may justify a review of the decision. It must also be submitted within five days of the publication of the decision. 

      The third one is judicial review. A defendant may appeal on errors of law, fact, or procedural breach to the Brazilian judiciary, within five years of the decision. This must be filed with a federal court, which can review any aspect of the decision. However, these courts are not specialised in antitrust enforcement and usually focus their analysis on formal, procedural aspects.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Yes.  Under article 47 of the BCL, any individual or company affected by a cartel infringement or any other anticompetitive conduct is able to seek indemnification. In most cases, it is necessary to prove the loss and to demonstrate the causality between the infringement and such loss. 

      The Brazilian Senate recently approved Bill No. 283/2016, which amends the BCL to facilitate damages lawsuits by individuals and private entities seeking compensation from companies engaged in anticompetitive practices. This Bill extends the limitation period for filing civil actions to five years, and provides for double damages, except from defendants that entered into a leniency agreement or a TCC with the competition authority. This Bill is now under review in the House of Representatives.

      Last verified on Tuesday 18th June 2019

  • Abuse of dominance/unilateral conduct

    • Brazil

      According to article 36, paragraph 2 of the BCL, dominance is presumed whenever a company or group of companies is capable of altering market conditions or whether it holds a 20 per cent share of a relevant market. Despite this legal 20 per cent threshold, the Brazilian antitrust authority will usually evaluate the actual competitive pressures over the investigated company to determine dominance.

      Last verified on Tuesday 18th June 2019

    • Brazil

      Based on the broad statutory parameters of article 36 of the BCL (which were roughly the same under the 1994 Law), CADE has adopted an effects-based approach to qualify unilateral conducts as anticompetitive and, therefore, illegal. In particular, the antitrust authority consider:

      • whether the company under investigation holds a dominant position, considering its market share and the main conditions for competition in the market;
      • whether the conduct under review can be abusive by restricting competition and excluding other companies; and
      • if this is the case, whether there are any reasonable economic justification for such practice.

      Very importantly, the BCL explicitly states that liability for anticompetitive conduct is strict (ie, no demonstration of intent or negligence is required).

      Last verified on Tuesday 18th June 2019

    • Brazil

      As mentioned above, in most cases CADE adopts a “by effect” or “rule of reason” approach, broadly articulated in the Annexes of CADE’s Resolution 20, of 1999, approved under the previous 1994 Law but still employed by the authority. 

      CADE has assumed a more rigorous position in relation to resale price maintenance (RPM), since the so called SKF decision (Administrative Proceeding 08012.001271/2001-44), adopted in February 2013. In this case, CADE concluded that minimum and rigid RPM adopted by a company with more than 20 per cent market share shall be presumed illegal, unless the defendant can demonstrate sufficient and proportional economic efficiencies to justify the restriction.

       

      Last verified on Tuesday 18th June 2019

    • Brazil

      A pricing strategy based on the grant of discounts and rebates by a dominant company may raise antitrust concerns when capable of foreclosing the market for competitors. CADE had the opportunity to analyse this kind of pricing strategy in at least two recent cases: Tô Contigo case and Ice Cream case (Administrative Proceeding 08012.003805/2004-10 and Administrative Proceeding 08012.007423/2006-27). 

      In the first case, AmBev – a beer company – was sanctioned for implementing a points-based programme where points accrued by retailers with the purchase of the company’s products could be converted into prizes. Even though the formal rules of the programme did not impose any sales condition on retailers, CADE concluded that in practice retailers were convinced that they could not sell competing brands in order to receive prizes. 

      In the latter case, Unilever was fined for allegedly granting rebates and bonuses to retailers in the market for ice cream in exchange of merchandising exclusivity, a minimum selling volume commitment and preference in the renewal of supply agreements. Even though the SG had found that only a few retailers were tied to this programme, CADE’s Tribunal concluded that they were strategic for ice cream sales, taking into account the location and the flow of consumers.

      Last verified on Tuesday 18th June 2019

    • Brazil

      CADE exempts companies if it concludes that the efficiencies derived from the practice outweigh the antitrust restrictive effects that may result from it. According to CADE’s Resolution N. 20/1999, efficiencies observed in vertical restrictions are frequently related to transactional cost savings for manufacturers or providers, either by (i) avoiding that an increase in intrabrand competition results in opportunistic practices by some dealers, suppliers or competitors to the detriment of service quality and its reputation, or (ii) by ensuring that the dealer or supplier will obtain an appropriate compensation, which will motivate it to allocate resources for the supply of products and services.

      However, CADE’s assessment of efficiencies is strict and, unless there is a solid demonstration that the identified antitrust problems can be outweighed by relevant, proportionate efficiencies shared with consumers, a restrictive practice will be deemed illegal under the BCL.

      Last verified on Tuesday 18th June 2019

  • Cooperation with other authorities

    • Brazil

      CADE has cooperation agreements in place with 10 countries, including Canada, United States, China, Japan, Argentina, Mexico and Chile. These agreements have facilitated cooperation between competition authorities in the context of merger control and cartel proceedings. For merger control, however, a waiver from the parties is still required. 

      Even without a formal agreement, CADE recently announced that it has cooperated with other authorities in 2018, including Italy, India, Australia and Peru, and that new agreements are being negotiated with Colombia, Costa Rica and Paraguay (CADE’s yearbook – 2018, at www.cade.gov.br/acesso-a-informacao/publicacoes-institucionais/anuario.pdf).

      Last verified on Tuesday 18th June 2019

Latin Lawyer gives you a fantastic platform to promote your legal expertise to our extensive readership base

Become an author

Contributing editors

Authors