Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Cartels volume discussing topics including leniency systems, enforcement trends, judicial review and compliance developments within key jurisdictions worldwide.
1 What kinds of infringement has the antitrust authority been focusing on recently? Have any industry sectors been under particular scrutiny?
Unlike in previous years, when cartel investigations were responsible for all the high and impressive numbers in the annual statistics released by the Administrative Council for Economic Defence (CADE), an interesting shift was noticed since 2018, putting unilateral practices in the spotlight. Unilateral conducts, which consistently seemed to be a secondary priority for CADE, most likely because of the focus of the qualified workforce in complex mergers and cartels, have gained CADE’s attention and efforts since then. The new trend is actually in line with what the General Superintendent (Alexandre Cordeiro) announced and anticipated when he took office in October 2017. He has very recently and again voiced that unilateral conduct will remain a priority for the next two years, in particular in digital markets, as – in his words – ‘the digital economy will remain a concern’.
Out of the four Google cases that had ongoing investigations, all related to abuse of dominance, three have been ruled on by CADE: the Scrapping case, Google Shopping and AdWords. CADE cleared all of them due to the lack of evidence. No fines were applied. Another relevant unilateral conduct ongoing case is one referring to potentially discriminatory practices from four of Brazil’s largest banks against one of the biggest fintechs in Latin America (Nubank). This is one of the first cases dealing with competition issues raised by fintechs to be assessed by CADE. In a nutshell, four Brazilian banks (Banco do Brasil, Bradesco, Caixa Econômica Federal and Santander Brasil) are being investigated by CADE for allegedly refusing to provide automatic debit services to Nubank, which, according to the accusation, would negatively impact the competition environment in the credit card market.
Also in the financial segment, CADE has investigated several banks after a complaint by the National Association of Cryptocurrencies and Blockchain (ABCB), which accused them of abusing their dominant position by closing cryptocurrency operators’ accounts, thus refusing to supply banking services. The investigation that began in June 2018 was eventually dismissed in 2019. The banks (Santander, Banco do Brasil, Itaú Unibanco, Banco Inter, Banco Bradesco and Cooperativo Sicredi) explained they closed the accounts – not for anticompetitive reasons – but due to safety concerns, such as suspicion that clients were using them to commit financial crimes (money laundering, pyramid schemes, etc). In December 2019, CADE’s General Superintendence closed the investigation against the banks, agreeing that cryptocurrency operators’ activities may be risky due to the complete anonymity of their clients, international transfers, fraud, financial pyramids and crimes related to cryptocurrency trading.
In 2017, CADE opened 18 preliminary investigations. An important shift took place in 2018 and updated statistics recently released by CADE show that, in 2019, the numbers increased even more. In 2019, CADE opened 89 investigations and ruled on 28 conducts overall: there were 53 new cases and 18 decisions involving coordinated practices and 23 new cases and 10 decisions involving unilateral practices. This represented an increase of 20 per cent in terms of the number of total new cases and 12 per cent in terms of decisions rendered, compared with the preceding year. Just in relation to unilateral practices, although the number of new cases dropped by 23 per cent between 2018 and 2019, the number of cases ruled increased from one to 10. The joint value of the imposed fines in unilateral cases was 5.7 million reais in 2018, having increased by 25 per cent in 2019, thus reaching 7.1 million reais, which confirms CADE’s focus on unilateral conduct cases.
There were seven convictions for cartel practice in 2017, and fines imposed exceeded 95 million reais, 23 per cent more than in the previous year. In 2018, there were 10 convictions for cartel practice, with the imposed fines exceeding 600 million reais (over six times more than the preceding year). The sharp increase in the amount of fines imposed by CADE in cartel sentences is mostly due to the large volume of proceedings arising from Operation Car Wash, among other factors. In 2019, there were 15 convictions for cartel practice, with the imposed fines exceeding 780 million reais, this time 25 per cent more than in the preceding year. However, this time, a single case – the Subway cartel – was responsible for 535 million reais out of the total reported fines.
Of all the cartel cases, bid rigging is still the focus of CADE’s attention. Over the past years, CADE has formally opened 19 proceedings (including preliminary and formal investigations) arising from Operation Car Wash, all of them related to public tenders and all of them deriving from leniency agreements. According to the media, there is more to come: CADE has announced that there are over 30 ongoing investigations related to Operation Car Wash alone – although only half of them have been made public to date.
Operation Car Wash began in March 2014 and initially involved the state-owned oil and gas company Petrobras and several construction companies. The scandal, which has been recognised as the biggest corruption and cartel probe in Brazilian history, has been draining much of CADE’s resources. Leniency applications in the context of Car Wash have led to cartel investigations beyond the oil and gas market: inquiries have been extended to the energy sector (nuclear and hydroelectric power plants), transportation (railways) and diverse civil construction projects, including urbanisation, large-scale buildings, soccer stadiums and airports. In 2019, CADE opened four new cases (involving civil works) in the context of Operation Car Wash.
In addition to the infrastructure sector – represented by Car Wash – CADE has recently opened cartel investigations into the medical services, financial services, auto parts, off-road vehicles and engineering services sectors, among other sectors.
2 What do recent investigations in your jurisdiction teach us?
Leniency agreements are certainly CADE’s major source of evidence. However, the current cases under scrutiny show that settlement – in connection with ‘leniency plus’ – has also been a very powerful instrument, not only in terms of conducting and expediting investigations, but also in relation to opening new inquiries.
Leniency plus can be proposed by a defendant from an ongoing investigation: the defendant discloses a new cartel through the leniency programme, and benefits twice (ie, by obtaining full immunity in relation to the disclosure of the new cartel, and also a fine reduction of one-third to two-thirds of the applicable penalty in the existing investigation).
According to the authorities, over 99 leniency agreements have been executed since 2003, with a record of 33 agreements in 2017 (most of which related to Operation Car Wash). Seven leniency-plus grants were made in the first half of 2017 alone and 34 settlement proposals were considered in the same period, with a very inexpressive rejection rate. According to CADE, in the majority of the current leniency applications, at least one settlement has been signed. As far as statistics go, in 2019, 11 leniencies have been signed, one plus leniency (as opposed to six and two, respectively, in 2018), and 19 settlement agreements were approved by CADE’s Tribunal (as opposed to 60 in 2018).
It is also interesting to analyse the results of the settlement programme by looking at the figures related to the settlement amounts collected. According to CADE’s statistics, in 2017, settlement amounts accounted for over 845 million reais. This represents almost nine times the amount of actual fines applied as a result of convictions (approximately 95 million reais) in the same year. Whereas in 2018, the grand total of imposed cartel fines amounted to 621.5 million reais, while settlement agreements contributed 1.3 billion reais to the ‘Diffuse and Collective Rights Fund’ (54 per cent more than in the previous year). In 2019, settlement amounts accounted for (a reduced amount of) 167 million reais (almost eight times less than in 2018), while the total of cartel fines amounted to 795.5 million reais (an increase of 28 per cent on the amount in 2018). It was the first year (at least since 2016), that the amount of fines exceeded the settlement amounts. Despite this apparent shift in 2019, it is possible to state that the practice shows that a settlement trend – where most cases are likely to end up being concluded mostly, or perhaps solely, on the basis of settlements – persists.
Another relevant aspect that recent investigations reveal is how the intense cooperation between the different authorities – including CADE, the federal police, and the federal and state prosecution service – has changed the way investigations are handled. CADE has benefited greatly from the evidence collected by those authorities, who have been able to share a significant volume of the documents gathered in the course of their own inquiries. By way of example, in 2017, CADE conducted at least one dawn raid, as opposed to two in 2016, five in 2014 and six in 2012. Another fact that may have contributed to the drop in the number of dawn raids is that leniency agreements, especially those related to Operation Car Wash, seem to be so robust and complete that they allowed (in CADE’s view) the opening of a formal inquiry without the need for dawn raids to collect additional evidence. Having said that, it seems that this trend began to change in 2018, when four dawn raids were carried out by CADE; three were carried out in 2019.
As a result of the positive outcomes from the leniency and settlement programmes, as well as the experience gained, CADE has been very open and flexible about discussing new proposals.
3 How is the leniency system developing, and which factors should clients consider before applying for leniency?
Leniency is still generally the standard source of, and instrument for, cartel detection in Brazil. The Brazilian authorities continue to strongly encourage new applications and have constantly been trying to make rules clearer and more transparent.
In 2016, CADE made efforts to formalise aspects related to the leniency system in Brazil. In May of that year, CADE published leniency guidelines (both in Portuguese and in English), which provide answers to 90 frequently asked questions and describe in step-by-step detail the leniency process in Brazil. This is intended to allow potential whistle-blowers to understand the process, with commitments and obligations presented in a straightforward, didactic manner. In September 2018, CADE released Resolution No. 21/2018 on the access to documents and information deriving from leniency agreements, settlement agreements and dawn raids. The regulation is intended to balance the conflicting interests between private enforcement and the confidentiality of leniency applications – an issue that is widely discussed, and not yet settled, among the various competition authorities across the globe.
While leniency applications are greatly encouraged, the General Superintendent has also been sending a message to potential applicants that the fulfilment of the requirements for leniency agreements are supposed to be very strict, in that only applications that bring sufficient evidence of cartel activity will be accepted – possibly as a means of focusing resources on the right areas. Since CADE’s General Superintendent, Alexandre Cordeiro, took office in October 2017, he has announced its intention to make changes to the leniency agreement policy, including the maintenance of confidentiality of documents provided as part of the leniency application, even after the case is ruled on. The purpose is to encourage companies to execute such agreements, by reducing the chances that the evidence they produce is used against them in the future.
Irrespective of this, the statistics continue to show a growth in marker requests (leniency proposals) in relation to previous years, with 20 leniency agreements in the first half of 2017, six leniencies in the whole of 2018 and 11 in 2019. In the majority of cases involving leniency, a settlement was reached between CADE and at least one of the defendants, suggesting that leniency and settlement programmes have a mutual connection and a complementary role in cartel enforcement.
Although the decision to engage in a leniency agreement is never an easy task, some elements that should always be considered before moving forward include the increasing level of fines imposed on companies, the criminal liability that may be imposed on individuals, the restrictions on public financing or participation in public tenders, and also the reputational risks involved.
4 What means exist in your jurisdiction to speed up or streamline the authority’s decision-making and what are your experiences in this regard?
Settlement agreements are certainly the most commonly applied and most effective of the tools used by CADE to streamline decision-making in inquiries, particularly in cartel cases. Settlement not only reduces the number of defendants – as the investigation will be suspended in relation to those who settle – but also expedites the fact-finding phase and the production of evidence, as a result of the collaboration and new evidence brought by settling entities or individuals.
The constant increase in the number of settlements executed by CADE is notable. CADE signed 61 agreements in 2016, 75 in 2017, 60 in 2018 and 19 in 2019. The sharp decrease in the number of settlement is unlikely to reflect a shift in CADE’s policy; it possibly results from the significant number of settlements in the previous years and the focus given to certain cartel cases during 2019, such as the Subway cartel. Settlements are contributing to the recent reduction in the length of the investigation periods. CADE’s statistics show, for instance, that the percentage of cases lasting more than 10 years is constantly decreasing.
Clients should know that a settlement agreement can be proposed and negotiated at any time during the investigation process, and that the moment they decide to do so will likely influence the level of the settlement amount to be paid. While there is no minimum discount on the expected fine, the first to settle is eligible for a 50 per cent discount, the second is eligible for 25 to 40 per cent, and the third for up to 25 per cent.
It is also within CADE’s discretion to reject settlements, although this is not common, at least to date.
The payment of a settlement amount is mandatory in cartel cases, as is the obligation to acknowledge guilt and the commitment to cooperate. In a few cases, CADE has been waiving the obligation on parties to submit new evidence as a result of settlement, although this is more likely to happen when CADE believes it has sufficient proof to convict the other defendants, and when a couple of settlements have already been executed. As a general rule, parties are expected to draft a History of Conduct and present new evidence.
It is only possible to propose settlement once, which means that if the negotiation is not successful, there will not be a second chance for a new proposal. Unlike leniency, settlement does not provide for immunity at the criminal, civil or administrative levels, which means that – as a result of confession – individuals may be exposed to criminal charges and legal entities to other administrative and civil claims, in particular damages recovery.
5 Tell us about the authority’s most important decisions over the year. What made them so significant?
One of the highlights of 2019 was the conclusion of the Subway cartel investigation, which was initiated in 2013. Before the Car Wash scandal and sequence of probes, this was considered the largest cartel case ever investigated by CADE. Eleven companies, including Alstom, Bombardier Transportation, Mitsui & Co and CAF, as well as 42 individuals, were fined approximately 535 million reais for participating in a subway-construction cartel in Brazil. Alstom, considered by CADE to be the ‘cartel leader’, was fined 128.6 million reais and was the only company prohibited from participating in public bidding on works projects involving rolling materials for the next five years (decision currently suspended as a result of Alstom’s appeal). This investigation started after a leniency agreement was signed by the authority with Siemens.
In 2019, CADE also settled two important investigations against the state-owned oil and gas company Petrobras. The settlement agreements were deemed by CADE as paradigmatic on the promotion of competition in the oil refinery and natural gas industries in Brazil. The first agreement, signed in June 2019, was associated with an abuse of dominance investigation in the oil refinery market and determined several measures regarding the divestment of refining assets held by Petrobras. It involved the sale of eight out of a total of 13 refineries by 31 December 2021, representing a significant impact on the national oil refinery market, which was, up to this point, almost fully explored by the state-owned company. The second agreement signed by and between CADE and Petrobras in July 2019 suspended an investigation in the natural gas market (also almost fully explored by Petrobras). Petrobras undertook, among other commitments, to sell shareholdings in several distribution companies. According to CADE, this will promote greater competitiveness in the Brazilian natural gas market and encourage new international and national agents to enter this market.
International cartels
In 2018, four international cartel proceedings were ruled on. Individually, they involved the gas-insulated switchgear, coloured picture tubes, colour display tubes and sodium carbonate markets. In 2019, CADE initiated the ruling process of the Power Cables case, an international cartel investigation from 2010 that has been conducted by several jurisdictions across Asia and Europe and that triggered relevant discussions of parameters to establish local effects and therefore CADE’s jurisdiction over cases of this nature. The trend of assessing the local effects of international cartels deserves to be highlighted, in particular due to the trend of cooperation among the different competition authorities across the globe. The cases provide important guidance on CADE’s approach in relation to the criteria and standard of proof that CADE is applying to establish jurisdiction over conduct that has taken place abroad.
According to the case law, it was held that (although in a non-structured manner) the Brazilian authorities would have jurisdiction over international cartels when it was possible to prove that Brazil was part of the agreement and that the Brazilian market was affected by the cartel.
This was further explored in the latest precedent-setting cases, and more specific criteria have been designed to establish local effects. In relation to the condition that ‘Brazil was part of the agreement’, CADE ruled that it will be sufficient to have express reference to Brazil as part of the agreement; or reference to the fact that South America or Latin America was part of the agreement; or even the fact that the cartel had global reach would be sufficient to characterise local effects, unless there was evidence that Brazil was clearly excluded from the scope of the cartel. In relation to the requirement that ‘the Brazilian market was affected by the cartel’, CADE took the view that it will be necessary to evidence that the products in question have – directly or indirectly – entered the Brazilian market. This means that products must either be exported to Brazil or incorporated into products sold in the Brazilian market.
The main evidence used to assess effects is the analysis of the volume of imports into the Brazilian territory. But the most controversial discussion concerns indirect imports (ie, when the product of the investigated cartel is incorporated into a product sold in Brazil). In this regard, the General Superintendence recognises that it is unfeasible to investigate and punish all and every cartel connected to products incorporated in any product marketed in the country. They have therefore suggested that criteria of relevance are put in place (ie, ‘indirect effects’ must prove to be ‘material, measurable and relevant’), which will be the case when Brazil is an important destination of the final product, when Brazil depends on imports and when the investigated parties have a substantial presence in Brazil, even if in unrelated markets.
Although further clarification is still expected, it seems clear that CADE is expanding the number of international cartels that may be captured by local rules.
6 What is the level of judicial review in your jurisdiction? Were there any notable challenges to the authority’s decisions in the courts over the past year?
The rate of judicial review and the level of consistency between CADE’s decisions and judgments by the Brazilian courts when those decisions are challenged have never been very clear. However, a comprehensive and interesting study named ‘The role of courts in competition law’, initiated in 2016 and conducted by the Economic Litigation Committee of IBRAC (the Brazilian Institute for the Study of Competition, Consumption and International Trade), is expected to shed some light on this question. The research aims to provide visibility on the outcome of judicial review (eg, whether courts end up confirming or reversing CADE’s decisions) and on how courts are applying competition law, irrespective of whether or not CADE was previously involved. Although the study is a work in progress, some of the project’s conclusions have already been released.
This assessment identified 123 lawsuits against CADE decisions filed between 1994 and 2016. The research did not cover all Brazilian courts, only the main ones and the Superior Court of Justice. It shows that to date an average of 49 per cent of CADE’s decisions have been fully confirmed by the courts and 31 per cent fully or partially revised.
Perhaps one of the most significant decisions subject to judicial review dates 2016 and concerns the endorsement by the appellate Regional Federal Court of the 1st Region of a first-instance decision rendered by a federal court in Brasília, annulling a fine imposed by CADE in the Medical Gases cartel case, in 2010. CADE had imposed record fines of 2.3 billion reais on IBG, Linde Gas, Air Liquide, Air Products Brasil and White Martins for cartel activity. The decision was challenged and annulled at first instance. The judge did recognise that CADE’s investigation had gathered sufficient evidence of collusive behaviour and an illegal practice. He has, however, acknowledged that the inquiry was opened on the basis of illegal wiretap evidence. Therefore, based on the doctrine of the ‘fruit of the poisonous tree’, the whole process was declared void. The decision, which is still subject to appeals, is considered an important victory in favour of the due process of law.
Finally, over the past few years a new pattern has also developed in relation to the involvement of judicial courts in the course of antitrust investigations. About five years ago, CADE’s decisions were generally challenged before the Brazilian courts only by the end of the probes, with the aim to either annul decisions or reduce the amount of fines imposed. Recently, defendants seem more encouraged to challenge in court the incidental measures and decisions rendered by CADE throughout the investigation, such as decrees to split investigations into different proceedings (most often due to the difficulty in serving on some of the defendants), access to documents gathered in dawn raids, among other ‘small matters’ involving procedural issues. The involvement of judicial courts in the course of investigations may positively affect the way CADE currently handles such investigations. It has proved to be very important and may be crucial to allow for a more legalistic procedure and provide greater legal certainty to defendants. In 2017, for example, in the context of Operation Car Wash, a judicial decision determined the restart of the term to the defendants to submit their defences, so as to allow defendants to consider in their defence the new documents that were brought to the case records after their service, in other words, after the defence deadline started running. CADE had denied the request, which was then granted by a judicial court.
7 How is private cartel enforcement developing in your jurisdiction?
Competition defence in Brazil is predominantly administrative, and therefore enforcement is entirely driven by CADE. CADE’s decisions are not subject to review at the administrative level, but may be challenged in court. And in fact – as we have discussed – a good portion of CADE’s administrative decisions are challenged before the courts by convicted companies.
In terms of damages claims, Brazilian antitrust law provides that victims of anticompetitive conduct may recover losses incurred as a result of anticompetitive conduct. Thus, any company or individual who is able to demonstrate its losses, establishing the link between the defendants’ conduct and the losses, must be duly indemnified.
Damages claims are not as common as in the US and EU, for instance, but this is clearly shifting – albeit slowly. Efforts to develop legal mechanisms for the entitlement of companies to recoup damages are incipient and still face some basic challenges, such as statutes of limitations, jurisdiction and legitimacy of claim proposals. In addition to the well-known delays inherent in the judicial system, as the Brazilian legal system does not provide for certain legal instruments, such as class actions and treble damages, it arguably does not create the appropriate level of incentives for damages claims.
There is, however, a recent bill of law (Bill 283/2016) proposed at Senate level with the purpose of addressing some of those issues. The bill suggests, for instance, that claimants will have the right to be compensated at up to twice the amount of the cost of the damage – although this should not apply to leniency applicants and defendants that enter into settlement agreements with CADE. The bill also suggests that CADE’s investigation will interrupt the statute of limitations for damages claims.
The aforementioned bill of law was recently approved by the Senate’s Economic Affairs Commission with a few amendments. The main alterations proposed referred to: the exclusion of a provision that considered the term of the cartel as a determinative factor for the calculation of the applicable damage claims; the definition of a five-year term for the statute of limitations; and the mandatory submittal to arbitration procedures to compensate damages for the signatories of settlement agreements. The bill of law is now under assessment by the House of Representatives. Owing to the current priorities established by the covid-19 pandemic crisis, its approval could be delayed.
According to media coverage, damages claims related to the Forex investigation and to the Brazilian real/US dollar rate (PTAX) (ie, both inquiries related to an alleged manipulation of exchange rates) are already expected in Brazil: apparently a few companies (including the state oil company Petrobras) have already indicated their intention to seek indemnification and have filed suits to interrupt the statute of limitations. In addition, one of the best-known damages recovery lawsuits – related to the Compressors cartel – has recently been withdrawn due to an out-of-court settlement that included a commitment to disclose part of the information and documents related to the leniency agreement executed by Whirlpool.
Although these cases are starting to come up to surface, private enforcement is still incipient in Brazil, mainly because of the challenge related to the calculation of the damages incurred to the plaintiff. For this reason, the Secretariat for Productivity and Competition Advocacy has recently issued guidelines aiming to provide more certainty for cartel damages valuation and stimulate private enforcement in Brazil.
8 What developments do you see in antitrust compliance?
New anti-corruption legislation (Law No. 12,846/2013), which was further amended by Decree No. 8,420/2015, has, together with Operation Car Wash, resulted in significant changes in the business environment, generating ‘positive externalities’ that extend to antitrust, environmental, labour and other areas of law. On the one hand, regulators have started ‘showing their teeth’ more intensely and, as a result, on the other hand, companies have reacted positively by strengthening their compliance programmes.
Of the country’s regulators, the Brazilian competition authorities have definitely been among the most active – and are therefore possibly the most feared. However, the increase in the number of investigations by different regulators has clearly increased potential levels of exposure, since now companies face a greater risk of dawn raids from different entities, which cooperate by sharing the documents and information obtained in raids.
A recent trend in Brazilian competition authorities’ decisions in cartel cases is the imposition of compliance programmes in the context of cartel convictions, showing that the authorities’ intention is not only to sanction the conduct, but also to prevent new instances of such behaviour, and to implement a new way of conducting business in certain industries that have repeatedly demonstrated problematic behaviour. During settlement negotiations in the context of Car Wash investigations, public prosecutors have imposed the hiring of compliance monitoring officers for a certain period.
In addition, companies are also being stimulated to carry out internal investigations and audits to anticipate any antitrust and anti-corruption risks that they may be exposed to, making it possible for these companies to better evaluate which strategy they should adopt, including the possibility of executing a leniency or a settlement agreement. Moreover, the increased enforcement powers of Brazilian public authorities, such as CADE and the main federal anti-corruption bodies – the Ministry of Justice and National Security and the General Comptrollers’ Office – have led entities to seek to establish compliance programmes, irrespective of the authorities’ requirements, especially because having an effective compliance programme is considered a relevant mitigating factor in the application of potential fines by these authorities.
Among the Brazilian subsidiaries of foreign companies, compliance policies existed long before this became a hot topic in Brazil. This is especially true for companies related to entities based in Europe and North America, which have a far more developed ‘compliance culture’. Nevertheless, some foreign companies’ compliance programmes might still be found to be old and outdated when considered in the context of the new Brazilian scenario.
9 What changes do you anticipate to cartel enforcement policy or antitrust rules in the coming year? What effect will this have on clients?
It is expected that anti-cartel enforcement will remain the authorities’ priority. Enforcement is currently particularly strong in relation to bid-rigging investigations, and this is not likely to change in the near future. Cooperation among local authorities is growing stronger year after year.
One particular challenge that is likely to crop up sooner or later is the double-jeopardy discussion that inevitably arises when competition authorities, seeking the imposition of penalties for cartel violations, investigate companies, and the Federal Court of Audit or public prosecutors, seeking the imposition of penalties for bid-rigging violations, investigate the very same companies on the basis of the same facts but grounded on different legislation. Clients are eager to see how this evolves and would welcome a one-stop-shop solution, whereby the negotiation of one single settlement agreement would be sufficient to eliminate the investigations on several fronts.
Also, CADE has achieved a level of maturity such that – provided it receives the proper financial and labour resources – it envisages engaging in higher levels of scrutiny of anticompetitive unilateral practices by dominant and super dominant firms in Brazil. In addition to other highly concentrated sectors in Brazil, the technology sector is one of the main candidates for such scrutiny.
In September 2018, CADE released Resolution No. 21/2018 on the access to documents and information deriving from leniency agreements, settlement agreements and dawn raids to substantiate damages claims actions, as particularly in cartel cases, this type of lawsuit will largely beneft from access to the documents mentioned in the Resolution.
The Resolution sets forth that, as a rule, the documents and information contained in these procedures should be open to public access. However, the Resolution also provides for some exceptions for documents that must always remain confidential, such as the history of conduct, which is a document drafted by CADE’s General Superintendence based on a self-accusatory document that is voluntarily provided by the party negotiating the leniency or the settlement agreement. In addition, the Resolution also determines that the access to the files may also be granted in international cooperation situations when there is limited risk to ongoing investigations.
The Resolution was created in light of the relatively low number of antitrust damages actions filed in Brazil, as that may point to the fact that additional mechanisms are necessary to enhance private enforcement. In general terms, the Resolution foresees the reduction of the fines imposed on participants in anticompetitive conduct whenever damages arising from the misconduct are awarded in courts.
Alongside the aforementioned memorandum, there is also a bill of law (Bill 11275/2019) currently under assessment by the House of Representatives that aims at encouraging compensation for damages lawsuits in Brazil. It includes, for instance, the obligation to compensate up to twice the amount of the cost of the damage – with the exception of leniency applicants and defendants that enter into settlement agreements with CADE, as further explained above.
Additionally, CADE has recently announced it intends to create a database mapping all criminal investigations related to cartel and public bidding cartels, with the aim of creating a higher level of cooperation between CADE and other authorities engaged in criminal prosecution, so as to foster cartel investigations in Brazil. The release date of the database is yet to be disclosed.
Finally, in February 2019, Brazil was accepted as a permanent member of the Organisation for Economic Co-operation and Development’s Competition Committee. As a result, we expect a higher level of international cooperation between CADE and other antitrust authorities in merger cases and investigations, as well as higher pressure for CADE to be on par with other antitrust watchdogs and an even higher level of commitment with international best practices in competition.
The Inside Track
What was the most interesting case you worked on recently?
We have worked on virtually all recent relevant cartel cases in Brazil, including Operation Car Wash and its spin-offs, onshore and offshore forex investigations, and the Auto Parts cases. But among those, one that has drawn attention on a worldwide scale is Operation Car Wash. This is the most relevant corruption and cartel probe in Brazilian history and possibly the most complex one, as it combines violations of different natures (including corruption, money laundering and bid rigging) and involves a number of government bodies. The investigation requires a high level of interaction and alignment between and with several different authorities.
If you could change one thing about the area of cartel enforcement in your jurisdiction, what would it be?
We believe that a one-stop-shop solution – whereby the negotiation of a single settlement agreement is enough to address investigations on several fronts – would be very welcome. It has often been the case that different authorities investigate the same facts under different laws or regulations (eg, cartels, corruption and other white-collar crimes). There is already a good level of communication and cooperation between those authorities at the moment, for the purpose of sharing evidence in particular. Settlement programmes could also benefit from this cooperation between authorities.
