Enforcement proceedings

Enforcement authorities

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The Administrative Council for Economic Defence (CADE),  is the agency responsible for investigating, prosecuting and rul­ing on abuse of dominance cases at an administrative level. CADE is divided into two depart­ments: the General Superintendence (GS) and the Administrative Tribunal (Tribunal).

 

The GS is responsible for initiating and conducting investigations on potential antitrust infringements. During its investigation, the GS has the power to search companies’ premises and to seize documents or other materi­als as it may deem necessary, provided that a judicial order is issued. After concluding its investiga­tion, the GS will issue a non-binding opinion with its findings and a rec­ommendation to CADE's Tribunal on the merits.

 

CADE's Tribunal is composed of seven Commissioners, including a Chairman, who are responsible for ruling a final decision on dominance cases by majority of votes. At the Tribunal, a Reporting Commissioner will be appointed to issue a vote after hearing CADE’s Attorney General and the Public Prosecutor's Office, who will issue non-binding opinions. The case will then be presented by the Reporting Commissioner to judgment before the Tribunal at a public hearing. The Tribunal may decide to dismiss the case if it finds no clear evidence of abuse of dominance or to impose penalties and order the defendants to cease the antitrust infringement.

 

Both the GS and the Tribunal have powers to impose interim measures and this has been a trend in 2020 for abuse of dominance cases.

Sanctions and remedies

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

Article 37 of Law No. 12,529/2011 allows CADE to impose fines that vary from 0.1 per cent to 20 per cent of the company or group of companies’ pre-tax turnover earned in the economic sector affected by the conduct in the year prior to the beginning of the investigation. Directors and other executives found liable for the conduct may also be fined from 1 per cent to 20 per cent of the fine imposed on the company. So far, the highest fine imposed on a dominance case was the 352 million reais fine imposed in the Ambev/Tô Contigo case (2009).

 

CADE may also order the publication of its decision in a major Brazilian newspaper, at the defendants’ expense, order structural or behavioural remedies, such as the corporate spin-off and impose any other sanctions deemed necessary to terminate the conduct’s anticom­petitive effects.

Enforcement process

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The sanctions are imposed directly by CADE. Despite that, if defend­ants fail to pay the fine or comply with other penalties within the term established in CADE’s decision, according to CADE’s Resolution No. 1/2012, it must petition the court in order to seek enforcement.

Enforcement record

What is the recent enforcement record in your jurisdiction?

The trend shows that CADE shall continue to grow its enforcement in connection with abuse of dominance in the coming years. According to statistics published by CADE, in 2018 and 2019, 66 investigations regarding unilateral conducts were launched by the authority.  

 

Abuse of dominance proceedings usually take from one to three years until CADE reaches a final decision, but complex cases may take a little longer as they involve consultations with the market and stakeholders (eg, agencies, trade associations, among others) and fur­ther discussions on economic rationale and possible efficiencies of the investigated conduct.

Contractual consequences

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

CADE has the authority to declare a contract or some of its provisions invalid if they are found to be an antitrust infringement under Law No. 12,529/2011. In this case, the contract’s remaining provisions not related to the antitrust infringement, if any, would remain in force.

In the Unilever and Sem Parar cases, for example, CADE determined that the agreements entered into with retailers and car parking operators, respectively, which contained the clauses considered to be abusive, should be amended. 

This was also the case in the settlement reached by OTAs with CADE in the context of the investigation into their MFN clauses with hotels.

Private enforcement

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

According to article 47 of Law No. 12,529/2011, those harmed by an antitrust infringement are allowed to seek indemnification and the ceasing of the anticompetitive conduct in courts. Courts have author­ity to adopt any measure – including invalidating contractual clauses or ordering a firm to grant access to certain technology (eg, with the purpose of obtaining the cessation of the anticompetitive conduct). Despite this framework for private enforcement resulting from anti­trust infringement, however, private actions are still relatively rare in Brazil.

Damages

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Article 47 of Law No. 12,529/2011 allows those harmed by an antitrust infringement to seek indemnification and the cessation of the anticom­petitive conduct in courts. This is parallel to administrative proceed­ings, which will not be suspended in view of the claim in court. Private compensation claims can be filed by an individual, an entity or by various entities. Consumer organisations, public prosecutors and other public bodies can initiate collective actions. Damages are assessed by the courts on a case-by-case analysis. Plaintiffs usually request the court to appoint an expert in economics to assess the competitive counterfactual price and enable damages calculation. To date, most claims for damages are stand-alone claims related to cartels. The calcu­lation method for damages in antitrust cases in Brazil is deemed highly controversial, and, due to the existence of only a few decisions granting damages, it is still unclear how Brazilian courts would tackle this topic.

Appeals

To what court may authority decisions finding an abuse be appealed?

CADE’s decisions finding an abuse can be challenged only before a fed­eral courts either in Brasília, the capital of Brazil, or at the domicile of the plaintiff.

Law stated date

Correct as of

Give the date on which the information above is accurate.

January 2021.